Finance Ministry: 2.5 pc budget deficit by year end, within IMF agreed margin


Revenues and expenditures drop as share of GDP.

The budgetary execution ended last year with a deficit of 2.5 per cent of GDP, the government staying within the target agreed with the IMF and the European Commission, against the backdrop of a 0.9 per cent drop in revenues and expenditures as share of GDP. “According to the operative data the execution of the general consolidated budget from January 1 to December 31, 2013, ended with a deficit of RON 15.77 bln, representing 2.5 per cent of GDP, falling within the established target of RON 15.9 bln (2.5 per cent of GDP), as a goal of that year’s budgetary policies and approved during the latest amending of the budget,” the Finance Ministry shows, Mediafax informs.
After the first 11 months the deficit stood at RON 9.8 bln, namely 1.56 per cent of GDP, so that in December expenditures surpassed revenues by RON 6 bln.
In November the Romanian authorities negotiated with the IMF a new deficit target for this year, up from 2.3 to 2.5 per cent of GDP, the difference meant to be reflected exclusively in supplementary expenditures on the co-financing of projects financed from European funds. “The 2013 deficit remained at the same level as the one in 2012, namely 2.5 per cent of GDP, against the backdrop in which health system and local administration arrears were paid (+0.4 per cent of GDP), public sector salaries were brought back to pre-cut levels (+0.5 per cent of GDP) and the sums earmarked from the state budget in support of projects financed from European funds grew by RON 1.6 bln year-on-year (+0.14 per cent of GDP), especially when it comes to the co-financing of projects whose beneficiaries are administrative-territorial units and the National Highway Company,” the Finance Ministry informs.
The general budget’s revenues, totaling RON 200 bln or 32 per cent of GDP, were 3.6 per cent higher in nominal terms compared to the same period last year, but dropped by 0.9 per cent as a share of GDP.
Expenditures grew by 3.8 per cent year-on-year in nominal terms, reaching RON 215.8 bln (34.5 per cent of GDP). As a share of GDP, expenditures dropped 0.9 per cent as a result of the lowering of expenditures on interest (0.1 per cent), subsidies (0.2 per cent) and social benefits (0.5 per cent). Profit tax revenues grew by 0.7 per cent compared to 2012, and income tax revenues grew by 6.5 per cent thanks to the hike in salary incomes that came as a result of restoring public sector salaries to pre-cut levels, of hiking the pension point (on February 1, 2013)  and the minimum salary (on July 1, 2013).
Likewise, VAT revenues grew by 2.6 per cent, while excise revenues grew by 4.2 per cent, being influenced by the hiking of the diesel oil, beer and cigarettes excise, but also by the exchange rate taken into account when paying taxes. Non-fiscal revenues dropped by RON 1.45 bln year-on-year, mainly as a result of a drop in revenues from BNR payments.
Expenditures on investments, including capital expenditures as well as those related to development programs financed from internal and external sources, stood at RON 31.6 bln or 5.1 per cent of GDP.

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