Romania’s public deficit in the first quarter (Q1) more than tripled compared to the same period last year, reaching RON 18 billion (EUR 3.7 bln) or 1.67% of the projected GDP for this year.

The deficit increased by 0.94% of GDP in March alone, according to data published on Monday, April 27, by the Finance Ministry.

The increase in the budget deficit, compared to the same period last year, is mainly explained by the unfavorable evolution of budget revenues in March.

Many companies postponed the payment of tax obligations during the state of emergency, resulting in unrealized revenues of RON 7.7 billion (EUR 1.59 bln).

Meanwhile, the Government approved additional VAT refunds of RON 3.17 bln (EUR 650 mln) to support liquidity in the private sector, the Finance Ministry explained.

Budget revenues in the first quarter decreased by 3.3% compared to the same period last year, to RON 72.2 bln (EUR 14.9 bln), while expenditures increased by 12.7% to RON 90.3 bln (EUR 18.6 bln).

On the revenues side, net VAT collections plunged by 19.4% compared to the same period last year. The decline in VAT revenues, of RON 3 bln (EUR 618 mln), was slightly higher than the drop in the overall budget revenues.

The profit tax revenues collapsed by 32.1%, or RON 1.3 bln (EUR 268 mln). On the expenditures side, social security spending went up by 17% year-on-year, or RON 4.6 bln (EUR 948 mln), and the public payroll increased by 9.4%, or RON 2.3 bln (EUR 474 mln).

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editor@romania-insider.com