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Bucharest
February 24, 2021
ECONOMY FINANCE&BANKING

Consolidated budget deficit goes up 1.21 pct of GDP in 11 months, almost double y-o-y

The general consolidated budget deficit went up 10.2 billion lei (1.21 pct of the Gross Domestic Product) after the first 11 months of this year, from 6.6 billion lei (0.79 pct) of the GDP) in the first 10 months, according to data released  by the Public Finance Ministry.

As compared to the first 11 months of 2016, the general consolidated budget deficit almost doubled, from 5.5 billion lei (0.72 pct of the GDP), January through November 2016 to 10.2 billion lei during this year’s same interval. MFP specifies that it falls within the 3 pct of the GDP estimated deficit.

The general consolidated budget deficit revenues worth 228.2 pct, standing for 27.1 pct of the GDP, were by 11 pct higher in nominal terms, as compared to the similar period of the previous year. According to MFP, increases were recorded from last year in terms of social contribution collections (+16.6 pct), salary and revenue taxes (+8.5 pct), and from non-fiscal revenues (+22.1 pct).

However, collections from property taxes and charges dropped by 11.1 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. The receipts from other taxes and charges on goods and services increased by 39.7 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 recovered in the last months of the gap recorded in the first quarter at the receipts’ level, so a slight increase by 1.5 pct against the same period of 2016 is being recorded, given that that receipts were affected both by the reduction of the VAT standard quota from 24 pct to 20 pct starting with 1 January 2016, a measure which was reflected in February 2016 receipts as well as the cuts as of February 2017 of the VAT standard ratio from 20 pct to 19 pct, MFP specifies.

The cashing from excise duties was by 3.5 pct smaller than in the same period of 2016, as it were influenced by their level’s drop for certain energy products as of 1 January 2017.

“The amounts from the European Union to the payments done are worth 13.8 billion lei,” says the MFP release.

As for the expenditures of the general consolidated budget, having amounted to RON 238.4 billion lei, these have gone up in nominal terms by 12.9 pct against those recorded in the first 11 months of 2016.

The staff spending grew by 21.3 pct as compared to last year’s similar interval, as they were caused by salary raises granted in the 2nd half of 2016, the application starting with August 2016, 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, to the postponement of certain deadlines, as well as to certain fiscal and budget measures and the modification and completion of certain pieces of legislation, and also to 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 30 pct of the gross salary of national libraries and museums’ staff starting with June 2017, the 15 pct increase of the military staff rank pay starting with June 2017, the 10 pct increase of police officers’ as of 1 October 2017 as well as the enforcement as of 1 July 2017 of the provisions of the Law-Framework no.153/2017 on the salaries of the staff paid from public funds,” the institution’s press release specifies.

The spending with goods and services grew by 1.7 pct as compared to same period of 2016, the increase reflecting in the public social insurance budget as well as local budgets and the self-financed institutions’ budget. According to the quoted ministry, interest rates are by 0.5 pct higher, y-o-y.

“Subsidies are down by 6.6 pct against the reported period, representing 0.6 pct of the GDP. The social care spending rose compared to last year’s reported period by 12.9 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; the increase and modification of the way to establish the state child allowance and the insertion incentive.

The spending for investments, that include the capital spending and the spending for the development programmes financed from internal and external sources were worth 17.5 billion lei, 2.1 pct of the GDP respectively.

According to the autumn economic forecasts released by the European Commission, the public deficit is due to reach 3 pct of the GDP in 2017, with 2018 worsening expectations to 3.9 of the GDP and 4.1 pct in 2019.

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