Romania’s public budget deficit shrinks to 3.4% of GDP in Jan-Oct
Romania’s Government accumulated a deficit of RON 47.1 bln (EUR 9.6 bln) in the first ten months of 2022, 2% less compared to the same period of last year. But thanks to the high economic growth and inflation, the gap-to-GDP ratio improved significantly to under 3.4% of GDP this year from more than 4% of GDP last year.
The gap accumulated in the first ten months of 2022 is a significant 2.4% of GDP (EUR 6.75 bln) below the full-year target as set under the latest budget revision. This is a major buffer for the deficit of the last two months of the year - when the Executive could settle its dues accumulated to the energy distribution companies as an effect of the “cap and subsidy” scheme.
As regards the budget execution in the first ten months, the revenues rose robustly by 22.7% YoY to RON 378.8 bln (27.1% of the annual GDP, up from 26.1% in the same period last year), thanks to strong “other taxes on goods and services” (windfall revenues taxation of energy companies, +285% YoY), significant 33.8% YoY advance of the profit tax revenues (with a significant contribution of the energy companies as well). More funds were also transferred from the EU budget (+35% YoY for the MFF 2014-2020).
The non-tax revenues rose by 54% YoY to nearly RON 36 bln (2.6% of GDP from 2.0% last year), driven by the dividends cashed by the state and the sales of CO2 certificates.
On the expenditures side, the 19.4% YoY advance to RON 425.9 bln (30.5% of GDP compared to 30.2% last year) was due to stronger public investments, as well as higher expenditures with subsidies and interest. The public capital expenditures rose visibly by 20.8% YoY.
The volume of subsidies rose, as expected, by 125% YoY to 3.0% of GDP from 1.6% of GDP in the same period last year.
The public debt service generated costs in the amount of RON 24.4 bln (EUR 5 bln) - 57.5% more YoY. The debt service to GDP ratio rose to 5.7% of GDP from 4.3% of GDP in the same period last year, heading to 6.5% of GDP in the entire year.
iulian@romania-insider.com
(Photo source: George Oprea/Dreamstime.com)
