Romanian government reports 2.5%/GDP deficit for 2013

By bne IntelliNews January 29, 2014

Romania’s general government budget deficit widened by 6.8% y/y to RON 15.77bn [EUR 3.57bn] in 2013 but remained roughly constant on the year when expressed as a share of GDP, equalling 2.5%, the finance ministry announced.

Notably however, the revenue-to-GDP ratio decreased by 0.9pps to only 32%. Out of this, 1.4% of GDP (constant from 2012) were transfers from the EU budget.

Revenues increased by only 3.6% to RON 200bn in 2013 as income taxes and social security contributions expanded above the average in line with the higher wages and slight recovery in employment.

The income tax collections increased by 8.5% to 11.4% of total budget revenues [vs. 10.9% in 2012]. Social security contributions increased by 5.3% to 27.2% of budget revenues, up from 26.7% in 2012.

On the opposite, profit tax collections inched up a mere 0.7% and consequently their share in total revenues contracted slightly to 5.5%. Notably, the VAT collections increased moderately by 2.6% – and even more strikingly they contracted by 1.2% y/y in Q4 alone based on our calculations.

Public spending increased slightly steeper than revenues - by 2.8% y/y to RON 215.8bn. But its share in GDP shrank to 34.5% in 2013 from 35.4% a year earlier. Higher payroll (up 13.5% to 21.5% of total expenditures) and higher goods and services purchase (up 12% to 17.9% of total expenditure) were offset by lower capital spending and only a slight increase in interest payments.

General government budget            
(RON mn) 2012 2013 y/y Q4/12 Q4/13 y/y
[1] Revenues         193,148         200,046 3.6%          52,070           52,753 1.3%
Profit tax 10,854 10,926 0.7% 2,708 2,883 6.5%
Income tax 20,957 22,736 8.5% 5,305 5,852 10.3%
VAT collections 50,516 51,827 2.6% 14,310 14,140 -1.2%
Excise taxes 20,260 21,106 4.2% 4,848 5,261 8.5%
Social sec. & Medicare contr. 51,658 54,379 5.3% 13,361 14,286 6.9%
Transfers from EU budget 7,979 8,911 11.7% 2,986 3,878 29.9%
[2] Expenditures 207,922 215,817 3.8% 59,672 60,380 1.2%
Payroll 40,799 46,299 13.5% 10,767 11,844 10.0%
Goods, services 34,444 38,580 12.0% 10,614 11,875 11.9%
Capital 19,305 17,855 -7.5% 7,402 7,255 -2.0%
Interest 10,711 10,756 0.4% 2,586 2,159 -16.5%
Social security 67,049 68,379 2.0% 17,109 17,499 2.3%
EU projects financing / transfers* 13,218 13,994 5.9% 3,888 5,424 39.5%
EU projects financing / other costs 1,614 869 -46.2% 470 254 -45.9%
[3] Balance [1-2] -14,774 -15,771 6.8% -7,602 -7,628 0.3%
Rev, % of GDP 32.9% 32.0%   8.9% 8.5%  
Exp, % of GDP 35.4% 34.5%   10.2% 9.7%  
Balance, % of GDP -2.5% -2.5%   -1.3% -1.2%  
Source: MoF, IntelliNews            

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