In a comment to the Eurostat releasing Romania's public deficit under the ESA methodology at 9.3% of GDP, the Ministry of Finance affirmed its commitment to stick with the 7%-of-GDP deficit target for this year and with the 7-year fiscal consolidation plan agreed with the European Commission under the Excessive deficit procedure.
"Romania reaffirms its commitment to meet the deficit of 7% of GDP in 2025 [under both cash and ESA methodologies] and, at the same time, to continue the fiscal consolidation trajectory in the coming years, as provided for in the Medium-Term National Budgetary - Structural Plan agreed with the European Commission," the ministry's statement reads.
The medium-term fiscal plan under the Excessive Deficit Procedure has, among its objectives, cut the budget deficit to 2.4% in 2031 and bring the public debt-to-GDP ratio under 60% by the end of the seven-year period (after possible deviations above the benchmark meanwhile).
The plan, endorsed by the European Commission, starts with an estimate of around 7.9%-of-GDP ESA public deficit in 2024 and an adjustment to 7% in 2025. The 2024 deficit, wider than assumed in October, should, in principle, result in an overall revision of the fiscal consolidation plan – defined in terms of annual dynamic of the net public expenditure (no more than +5.1% y/y in 2025, 4.9% in 2026, 4.7% in 2027, 4.3% in 2028, 4.2% in 2029 and 3.9% in 2030, under the plan inked in October). The ministry, however, doesn't address this issue in its press release.
Romania's budget deficit calculated according to the national "cash" methodology was, in 2024, 8.65% of GDP, respectively RON 152.72 billion, the Ministry of Finance says in its press release.
The ESA budget deficit, according to official Eurostat data published on April 22, was 9.3% of GDP at the end of last year, the ministry explains, adding that "the deficit was calculated using the accrual reporting system, defined in the European System of Accounts (ESA 2010), as well as in the regulations issued in application of the Treaty establishing the European Union."
Thus, the difference between the two approaches is the result of applying different estimation methodologies.
Negative influences in the calculation of the ESA deficit were mainly the amounts owed and unpaid at the end of the year by budgetary institutions, which implied higher expenses by RON 9.1 billion, as well as the transposition of interest (-RON 9.6 billion) from the cash basis to the accrual basis depending on the payment terms.
The Ministry of Finance pointed out that this is not the first time that differences have been observed between the ESA deficit and the cash deficit in Romania.
iulian@romania-insider.com
(Photo source: Vlad Sogodel/Dreamstime.com)
