25.7 C
May 20, 2022

Budget deficit of 6.5 pc of GDP in 2010, below IMF agreed target

Nevertheless, expenditures reached RON 201.9 bln, up by 4.2 pc compared to 2009.

According to the Ministry of Finance data remitted to the press, the budget deficit stood at RON 33.3 bln or 6.5 per cent of GDP in 2010, below the RON 34.6 bln deficit target set as the budgetary policy’s goal and included in the supplementary letter to the stand-by agreement reached with the IMF. The deficit dropped by 0.9 per cent compared to its 2009 level of 7.4 per cent of GDP.

Budget revenues totaled RON 168.6 bln, up by 7.2 per cent in nominal terms compared to the year before. The hike in revenues was mainly due to growing revenues from taxes on goods and services and from VAT (+14.3 per cent), from excises (+11.5 per cent) and from non-fiscal goods (+18.5 per cent).
Although on a downward trend, the year-on-year discrepancies were significant in the case of the income tax (-3.2 per cent), profit tax (-4.9 per cent) and social insurances contributions (-4.5 per cent). The sums received from the European Union as loan installments reported a 281 per cent growth compared to the same period last year, totaling RON 5.4 bln as against RON 1.9 bln.

Budget expenditures reached RON 201.9 bln, up by 4.2 per cent compared to the year before. The hike was mainly due to growing expenditures on EU-financed projects (+170 per cent), interest (+20 per cent; as a consequence of financing budget deficits accumulated in previous years) and social assistance (+7.3 per cent; as a consequence of growing expenditures on unemployment benefits). Likewise, expenditures on goods and services grew by 5.2 per cent compared to 2009, mainly as a consequence of hiking the national health insurance fund’s expenditures in order to pay arrears.

According to the same data, the year-on-year growth in expenditures on goods and services at local administration level was caused because the latter took over the financing of the Agricultural Chambers’ activity in March 2010 and also the financing of hospitals in July 2010 as part of the decentralization process. Expenditures on personnel were 8.6 per cent below those reported in the same period the year before.

Expenditures on investments that include capital expenditures, as well as development programmes financed from internal and external sources, totaled RON 33.7 bln or 6.6 per cent of GDP in 2010.

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