Romania’s general government budget deficit surged by 80% YoY to RON 17 bln (EUR 3.4 bln) in January-February, the Finance Ministry announced.

The public deficit to GDP ratio rose to 1.07% from 0.67% in the same period last year.

However, the Government may expect bullet revenues in June, when the energy companies are supposed to pay the solidarity contribution, and in the second quarter of the year, when the same companies will disburse high dividends. This means the January-February budget figures should be taken with a bit of salt. Nevertheless, the disappointing VAT collections should be reversed in March – as well as the robust consumption contrasts the weak VAT revenues to the budget.

In January-February, the revenues rose by only 8.3% YoY to RON 73.9 bln and the expenses by 17% YoY to RON 91 bln.

The main driver behind the visible deterioration of the public budget balance is the slow advance of the VAT collections (typically ¼ of the total budget revenues): only +1.9% (to RON 17.5 bln, included in the overall budget execution) for the nominal net collections.

The growth was still weak, +11% (to RON 21.6 bln), for the calculated nominal gross collections – despite the high consumer price inflation (15% YoY) and the significant increase in the retail sales (+5.8% YoY, volume terms, in January).

In contrast, the income tax collection surged 42% YoY to RON 7.2 bln.

The expenses with subsidies, interest and goods/services rose by 147%, 60% and 24% YoY, respectively.

iulian@romania-insider.com

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