The general government budget deficit in the first eleven months of last year has narrowed to RON 56 bln (EUR 11.3 bln), one-third less than the gap in the same period of 2020, according to data published by the Romanian Ministry of Finance on December 27.

The improvement was slightly steeper in terms of per-GDP terms: from 7.9% to 4.7%.

The revenues increased by 17.5% YoY in nominal terms and by 1.25pp in per-GDP terms (from 27.4% to 28.7%).

The 36% YoY surge in VAT collection, largely responsible for the better revenues, reflects payments deferred from 2020.

The expenditures increased by only 6.1% YoY in nominal terms and contracted by 2pp in per-GDP terms (from 35.4% to 33.4%).

The public payroll edged up by only 1.4% YoY and contributed nearly half (0.9pp) to the drop in the expenditures-to-GDP ratio.

The Government targeted under its latest budget revision a deficit of 7.13%-of-GDP for 2021, down from 9.8%-of-GDP in 2020. But it may have ended with better performance, actually recommended as appropriate by the Fiscal Council.

Although the expenditures are particularly high in the last month of the year, a monthly deficit of the same magnitude as of December 2020 would still keep the budget gap in full 2021 around 6.6% of GDP - around 0.5pp below target.

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andrei@romania-insider.com