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June 29, 2022

MFP: Budget deficit continues to narrow 8 months into 2017 to RON 6.5 bln (0.78 pct of GDP)

The general budget execution January into August 2017 closed with a RON 6.5 billion deficit (0.78 pct of the Gross Domestic Product, GDP), as reported to the deficit of RON 3.1 billion (0.41 pct of GDP) in the similar period of 2016, on Monday informed the Public Finance Ministry (MFP).

From January to July 2017, the budget deficit parked at RON 5.1 billion (0.63 pct of GDP), as compared to RON 1.74 billion (0.23 pct of GDP) seen in the same period of 2016.

The general budget revenues of RON 160.4 billion (19.2 pct of GDP) were by 8.9 pct higher, in nominal terms, against the same period of 2016.

According to MFP, increases were recorded from last year in terms of social contribution collections (+16.6 pct), salary and revenue taxes (+10.4 pct), non-fiscal revenues (+14.0 pct) and at capital incomes (+13.4 pct).

However, collections from property taxes and charges dropped by 6.4 pct as compared to the similar period of 2016, the decrease having its roots mainly in the cancellation of the special constructions’ taxes as of 1 January 2017.

Moreover, the receipts from other taxes and charges on goods and services soared by 66.3 pct as compared to the same period of 2016, the rise being caused mainly by the trend of the revenues related to the contribution owed for medicines, as well as by the cost-volume / cost-volume profit contracts financed from the budget of the National Social Health Insurance Single Fund.

As regards the revenues from the VAT they recorded a decrease by 1.7 pct in the first 8 months of 2017, against same period of 2016, because of the cut with 1 January 2017, of the VAT standard ratio from 24 pct to 20 pct, a measure that reflected in cashing starting with February 2017. Moreover, with February 2017, the cuts of the VAT standard ration from 20 pct to 19 pct is also mirrored in the collections.

The cashing from excise duties was by 5.2 pct smaller than in the same period of 2016, as it were influenced by the drop in is level for certain energy products as of 1 January 2017.

“The amounts from the European Union to the payments done are worth RON 7 billion,” says the MFP release.

As for the expenditures of the general budget, having amounted to RON 166.9 billion, these have gone up in nominal terms by 11.0 pct against those recorded in the same period of 2016.

The staff spending grew by 21.4 pct as compared to the reported period, as they were caused by salary raises granted in the 2nd half of 2016, the application with August 2016, respectively, of the provisions of OUG no. 20/2016 for the modification and completion of the OUG no. 57/2015 on the public staff pay in 2016 and completion of certain pieces of legislation, such as the salary rises granted in 2017, the 15 pct increase respectively to the Health and Education sectors’ staff with 1 January 2017, to the public staff with the public institutions and authorities belonging to the local public administration, who benefited from 20 pct salary rise with 1 February 2017, to the growth of the national minimum wage from RON 1,250 to RON 1,450 with 1 February 2017, to the increase by 50 pct of the gross salary and the bonuses for the staff with the entertainment or concert public institutions starting with 1 February 2017, as well as the enforcement with 1 July 2017, of the provisions of the Law-Framework no.153/2017 on the salaries of the staff paid of public funds.

The spending with goods and services grew by 4.1 pct as compared to same period of 2016, a higher increase being recorded at the National Social Health Insurance Single Fund, by 6.5 pct.

“Subsidies are up by 4.6 pct against the reported period, while the interest rates are down by 5.9 pct,” the MFP adds.

The social care spending rose compared to reported period of last year by 11.3 pct, as it was influenced mainly by the 5.25 pct rise in the pension point from 1 January 2017, reaching RON 917.5, and by 9 pct as of 1 July 2017, parking at RON 1,000, as well as by other measures approved during 2016, which have contributed to the augmenting of the social expenditures, such as: the increase of the number of social aid beneficiaries by excluding the state child allowance from the families’ revenues at setting the social aid (minimum income); the increase of the benefit granted to the adult with a serious eye handicap by growing with 25 pct the net salary of the middle-school rookie social worker from the budget sector’s social care units, others than the ones with beds, and the increase of the number of persons included in various types of handicap; the increase and modification of the ways to establishing the monthly allowance for child growth and insertion incentive; professional pensions for the court clerks, air staff, parliamentary public staff, auditors with the Court of Accounts.

The spending for investments, that include the capital spending and the spending for the development programmes financed from internal and external sources were worth RON 10.5 billion (1.3 pct of GDP).

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