Romanias general government surplus at 0.17% of GDP in January.

By bne IntelliNews February 26, 2013
In January, Romania's general government posted a surplus of RON 1.04bn or 0.17% of the full year GDP projection, close to the surplus reported in the same month of the previous year, the finance ministry reported. This is not particularly relevant since the government has operated under the provisions of last year's budget in January before the 2013 budget planning was endorsed in February. The revenues decreased by 1.8% y/y nominally to RON 15,981mn driven notably by the 9.5% y/y decline in VAT collection to RON 4,269. Excise taxes increased by 27.7% y/y to RON 2,105mn on the back of higher excise levels enforced as of January. The collection of income tax also increased by 16% y/y to RON 2,279mn partly due to the higher wages paid in the public sector as of January*. The government's expenditures decreased by 2.2% y/y to RON 14,942mn. The public payroll increased by 16.2% to RON 3,734bn (25% of total public spending up from 21% as of January 2012). Notably the interest paid on public debt increased by 40.2% y/y to RON 948mn, or 6.3% of the total public spending. The government plans to narrow the general budget deficit to 2.1% of GDP this year from 2.3% of GDP in 2012, in cash-based terms, thus setting a less ambitious fiscal consolidation pace than the initially envisaged 1.7% of GDP deficit target. But even for this looser target, the government had to enforce new taxes that are expected to bring an additional 0.5%-of-GDP in revenue in 2013. This year's growth is expected to be driven solely by better EU funds absorption - which is beneficial, yet risky. * public wages returned to the level of mid-2010; following the massive 25% wage cut from mid-2010, public wages increased by 15% in 2011, 8% in July 2012 and another 7.4% in December 2012

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