The general government budget of Romania posted a deficit of 2.0%-2.1% of the full year's projected GDP in Q1, according to sources familiar with the preliminary data quoted by Profit.ro and Economedia.ro. 

The sharp 60% y/y leap in nominal terms to RON 37 billion (EUR 7.2 billion) and the significant advance of the deficit-to-GDP ratio from 1.4% in Q1 2023 (1.1% of GDP in Q1 2022) was commented on by the sources, however, as a rather bright result. 

The Ministry of Finance had planned a 2.5%-of-GDP fiscal gap in Q1 on the grounds that significant (but unspecified) military spending was scheduled for the first part of the year. 

However, even without the bullet military spending, estimated at RON 6 billion, Romania's public deficit would have increased by over 30% y/y and exceeded 1.7% of GDP in the first quarter of the year. One-off spending in the sanitary system was made, the sources explained, without providing further quantitative details.

Romania's government targets a public deficit of just under 5% of GDP this year, from 5.6% of GDP in 2023. However, independent analysts expect a public gap of over 6% of GDP in 2024 and significant fiscal corrective measures in 2025.

iulian@romania-insider.com

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