Higher VAT collection, lower expenses help Romania double budget surplus

Romania ended the first quarter of the year with a budget surplus and has managed to more than double it compared to the first two months of the year. The country recorded a budget surplus of EUR 1.1 billion, or 0.7% of the GDP, up from the 0.33% of the GDP at end-February, the Finance Ministry recently announced. A boost in VAT collection, excise and income tax revenues helped the country achieve this result. Not only did the budget surplus increase in the third month of the year, but it also managed to recover from a deficit in the same period of 2014. Back then, the deficit stood at 0.14% of the country’s GDP. Romania’s budget revenues, standing at some 7.8% of the GDP, were of some EUR 12.3 billion. In nominal terms, this was 12.6% higher year-on-year. The country managed to up its VAT revenues by as much as 20.8%, revenues from excises grew 11.4% while income tax revenues also saw a 14.6% boost. Meanwhile, impacted by the 5 percentage points social security cut, revenues from social insurances went up by a mere 0.5% year-on-year. While growing revenues, Romania also managed to cut expenses by 0.6% year-on-year, to some EUR 11.2 billion. It recorded the biggest reduction in costs for interest rates, down by over a third, thanks to seasonal payments and a drop in state titles yields to a historic low. The state invested some 0.5% of the GDP, or some EUR 780,000, in the first quarter of the year. This was 2.5% higher year-on-year. Romania targets a 1.83% deficit of the GDP for the whole 2015, as agreed with international financiers. This would be close to the one recorded in 2014, 1.85% of the GDP. editor@romania-insider.com