Romania’s public deficit reportedly hits 3.43% of GDP in January-May

Romania’s general government budget reached 3.43% in January-May, edging up against the government’s expectations from 3.24% in January-April, according to preliminary data published by Profit.ro.

In April, the government paid in advance pensions accounting for some 0.6% of GDP and reportedly expected to report a monthly surplus in May.

In absolute terms, 3.43% of GDP deficit in January-May means that the public gap has widened by 64% y/y in nominal terms to RON 60.6 billion (EUR 12.2 billion) in the first five months of the year.

Part of the deviation from the planned gap, reflected by its impressive 64% y/y advance, can be attributed to the delayed disbursements from the EU budget under the Resilience Facility and defence spending deferred from 2023 to the first months of this year.

The government officially targets 5% of GDP public deficit this year, down from 5.7% in 2023. However, the independent projections put the gap at nearly 7% (6.6% of GDP under the European Commission’s latest forecast).

Reflecting the discretionary rise in public wages, the pension reform, and the strong public investments and despite the first fiscal corrective package passed in 2023 (with a positive impact of 1% of GDP this year), Romania’s budget deficit will rise from 6.6% of GDP last year to 6.9% of GDP this year (ESA terms), according to the European Commission publishing the Spring 2024 Economic Forecast.

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