Romania’s public budget deficit widened by 60% in January-September this year compared to the same period last year, to RON 27 billion (EUR 5.68 bln), the Finance Ministry announced on Wednesday, October 30.

The deficit in the first three quarters of the year accounts for 2.62% of the GDP projected for this year (RON 1,031 bln). In the first nine months of 2018, the budget deficit to GDP ratio was 1.78%.

At the beginning of this year, the Government set a 2.76%-of-GDP budget deficit target for the whole year, but admitted that 3% of GDP would be a good-enough performance. Independent projections put the full-year gap above 3.5% of GDP and the figures released for the first nine months of the year justify such expectations.

The revenues to the general government budget increased by 11.6% year-on-year to RON 228.7 bln (EUR 48.6 bln). The social security contributions (15.3% stronger than last year) accounted for 36.3% of the total revenues and contributed to roughly half of the increase in budget revenues.

The minimum price hike planned for January and the higher wages in the public sector would in principle support further growth of social security contributions but would put more pressure on the public and private sector on the downside. The state’s expenditures increased by 15.3% year-on-year to RON 255.6 bln (EUR 54.3 bln).

The funds distributed from the EU budget increased by 25% year-on-year and the capital expenditures were 30% larger as well, resulting in a combined RON 6 bln rise of the public expenditures.

Social assistance cost alone increased by RON 8 bln, while public payroll absorbed RON 13 bln more than in the same period last year.

(Photo: Pixabay)

editor@romania-insider.com