Romania’s public deficit reportedly hit 1.2% of GDP in February alone

Romania’s budget deficit reportedly reached 1.67% of GDP in the first two months of 2024, up from 1.07% a year earlier, according to Profit.ro quoting preliminary data released by sources. This accounts for one-third of the 5%-of-GDP full-year official deficit target.

In February 2024 alone, the public gap accounted for 1.2% of GDP, up from 0.8% of GDP in the same month last year, according to the data published by Profit.ro.

The Finance Ministry will publish the January-February budget execution after March 25.

In 2023, Romania posted a cash deficit accounting for just under 5.7% of GDP, but the budget execution in the first months of 2024 indicates that some expenditures were deferred from Q4 last year to keep the 2023 gap under the target agreed upon with the European Commission (5.7% of GDP).

The Fiscal Council estimated Romania’s budget deficit this year to be at least 6% of GDP, but the risks for wider slippage are multiple.

In absolute terms, Romania’s budget deficit reached nearly RON 29 billion (EUR 5.8 billion) in January-February (+70% y/y) after the wide RON 21 billion (EUR 4.2 billion) gap in February alone. The military spending (reported as capital expenditures) was reportedly RON 3 billion in January and February each. It is possible that one-off payments to the public health system also contributed to the wide gap in February, according to Profit.ro.

Separately, the budget revenues are seasonally low in February. The revenues for the first two months of the year increased by 17% y/y (+19.7% y/y in January), while expenses rose by 27% y/y (+26.7% y/y in January), according to Profit.ro.

(Photo source: Alexandru Marinescu/Dreamstime.com)