Romania’s budget deficit widens to 2.1% of GDP in Jan-Aug

Romania’s budget deficit reached RON 22 billion (EUR 4.6 bln) in the first eight months of this year (January-August), 50% more than in the same period last year.

The deficit thus reached 2.1% of GDP, up from 1.5% of GDP in the same period last year.

The Government targets 2.76% of GDP deficit this year and has repeatedly assured that the gap would not exceed 3% of GDP.

Independent analysts are less optimistic, indicating a deficit of 3.5%-4% of GDP this year.

The budget revenues in January-August increased by 11.9% year-on-year to RON 204.1 bln (EUR 43.4 bln), or 19.8% of the GDP projected for this year, marking a slight improvement from the 19.3% of GDP ratio in the same period last year.

The bulk of the increase in budget revenues was generated by 15.8% higher social security contributions (due to higher wages): they increased by RON 10.1 bln compared to the same period last year, out of the RON 19.7 bln increase in the overall budget revenues.

The budget expenditures increased by 14.8% year-on-year to RON 226 bln (EUR 48 bln), or 21.9% of the year’s projected GDP (20.9% of GDP last year). The public payroll rose by 20.9% year-on-year to RON 68 bln (EUR 14.4 bln), representing 30.1% of the total budget expenditures (28.6% last year) or 6.6% of this year’s GDP (6.0% last year).

On the upside, the capital expenditures and disbursements for EU-funded projects increased by robust rates of 26% and 25% respectively - both on low base, nonetheless on an encouraging note.

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