Romania's public budget gap leaps up 67.5% y/y to 1.7% of GDP in Jan-Apr

The general government budget in Romania increased by 67.5% y/y to RON 27.4 bln (EUR 5.5 bln) in January-April, the Finance Ministry announced.

The revenues increased by 9.7% y/y to RON 158.4 bln, slower than inflation.

The profit tax edged up by only 3.1% y/y and the net VAT collection by only 3.7% y/y, dragging down the revenues below target. The tax agency head Lucian Heius mentioned RON 5 bln (EUR 1 bln) missing tax revenues versus the target.

The expenditures rose 15.6% y/y to RON 185.8 bln.

The public deficit thus reached 1.7% of the year's projected GDP in the first four months of this year. The full-year target is 4.4% of GDP. The ratio increased by 0.56pp from 1.16% of GDP in the same four-month period of 2022.

In April alone, the budget deficit was nearly 0.3% of GDP – not a large figure in absolute terms but impressive in the seasonal context (the gap was 0.04% of GDP in April 2022).

The total revenues increased by 9.7% in January-April, as well as in Q1 and April separately. But in April, the net VAT collections contracted unexpectedly by 13.2% y/y after an already disappointing 9.4% y/y advance in Q1. On the upside, the excise tax collection nearly doubled in April (+93% y/y) after the 2.2% y/y contraction in Q1.

The disbursements from the EU budget under the MFF also rose sharply – by 92% y/y in April (+7.0% y/y in Q1).

On the expenditures side, the growth rate was 19.2% y/y in April – faster than the 14.3% y/y in Q1 and much faster than the revenues.

The interest on public debt surprisingly contracted by 3.6% y/y in April, and the capital expenditures rose by 50% y/y (+18.2% y/y in Q1).

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