Romania’s first 2014 budget adjustment scheduled for July 30

By bne IntelliNews July 17, 2014

The first adjustment of Romania's 2014 public budget planning will be operated on July 30, unofficial sources told news agency Mediafax.

An IMF team is supposed to supervise the adjustment, the unnamed sources informed earlier in June when the IMF experts announced the postponement of the stand-by deal review until after the November presidential elections.

Romania’s budget deficit is planned to narrow moderately by 0.3% of GDP to 2.2% of GDP this year.

Despite lower than expected revenues in the first months of the year, the full-year deficit target remains achievable due to the supplementary tax on special industrial assets that generated more revenues than planned. This will also cover the loss in revenues generated by the very likely enforcement of lower social security contributions [CAS] as of October.

Romania’s general government deficit shrank 72.6% y/y to RON 651mn [EUR 146mn] in Apr-May – accounting for 0.10% of the full-year projected GDP, after a similar sharp 77.8% y/y contraction to 0.14% of GDP in Q1. Even though not fully relevant for the entire Q2, Apr-May data prepare the ground for a robust fiscal consolidation in the second quarter of the year.

The drivers of the fiscal consolidation remained however unsustainable in Apr-May. The smaller fiscal deficit was an outcome of fewer public investments pushed down by lingering infrastructure projects, and fewer co-financing of EU-funded projects that are partly at deadlock. The European funds ministry explained that many projects are blocked by contractors giving up works after their bid turned to be too low. Also, the new but already controversial tax on special industrial assets contributed to the sharp contraction of budget deficit this year.

Related Articles

UAE investor to develop $500mn agri-food group in Romania

The Al Dahra Group of the United Arab Emirates (UAE) wants to purchase nearly 60,000 hectares of agricultural land along the Danube River, develop a logistics company including water and road ... more

Romanian president rejects justice minister’s request to dismiss head of anti-corruption body

Romanian President Klaus Iohannis said on April 16 he is rejecting a request from the justice minister to dismiss the head of the National Anticorruption Directorate (DNA), Laura Codruta Kovesi. ... more

ArcelorMittal proposes to divest assets in Czech Republic, Macedonia and Romania

International steel and mining company ArcelorMittal said on April 13 it has proposed a divestment package to the European Commission in a bid to obtain approval for its planned acquisition of ... more

Dismiss