Romania's budget deficit increased by RON 6.77 billion (nearly EUR 1.4 bln, or 0.7% of the year's GDP) in October, reaching RON 74.0 bln (EUR 15.2 bln) in the first ten months of the year.

The public deficit in Jan-Oct accounts for 7.05% of GDP, compared to the 9.1% of GDP full-year target set by the Government.

The measures aimed at mitigating the pandemic's economic impact (fiscal incentives, investments, and one-off expenditures) account for RON 40.7 bln (EUR 8.4 bln) or 3.88% of GDP, the Finance Ministry said in a statement.

Earlier this year, finance minister Florijn Citu estimated the whole fiscal stimulus at 7% of GDP for the full year. This target can no longer be reached given the budget execution for the first ten months of the year.

Filtering out the 3.88%-of-GDP impact of the crisis, the corrected public deficit of 3.17% of GDP is not far from the level posted in the same period last year (2.72% of GDP).

Furthermore, the budget revenues had positive annual dynamics for the third month in a row. Thus, the budget revenues in January-October increased by 0.9% year-on-year (-0.4% yoy in Jan-Sep), to RON 263.5 bln (EUR 54.3 bln), thanks to an outstanding 10% yoy increase in October alone - when the budget revenues were the strongest this year.

The tax revenues alone increased by 2.9% yoy in October, after shrinking by 5.6% yoy in Jan-Sep, resulting in an overall 4.5% yoy decline in Jan-Oct. Net VAT collection increased by 14.1% yoy to RON 6.9 bln (EUR 1.42 bln) in October alone. For the whole January-October period, the net VAT collection still lags by 11% yoy.

The budget expenditures in January-October rose by 16.4% yoy to RON 337.5 bln (EUR 69.6 bln). In October, they increased by 24.1% yoy, to RON 42.5 bln (EUR 8.76 bln).

Nearly half of the increase in total budget expenditures in Jan-Oct compared to the same period last year (RON 47.6 bln) went into the social security expenditures: RON 21.6 bln. Both in October and the whole Jan-Oct period, the social security expenditures rose by 22-23% yoy.

The co-financing of EU-funded projects, the public payroll, the acquisitions of goods and services, and the public investments accounted for the other half of the rise in public expenditures in January-October. 

iulian@romania-insider.com

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