The general government budget deficit under cash terms reached 3.4% of GDP in the first five months of the year, according to preliminary data announced by Profit.ro. The deficit-to-GDP ratio is at the same level as it was in the same period of 2024, when it ended the full year at 8.65% under cash terms and 9.3% under ESA terms.
Official data as of January-April indicate a 2.95%-of-GDP deficit this year, compared to 3.25% of GDP in the same period of 2024 – which prompted optimism among government officials. The relative performance was, however, achieved on pension payments made in advance last April, while the January-May figures are more comparable (although not as comparable as full-quarter figures).
This year, the deficit target was set, under both cash and ESA terms, at 7% of GDP – while a 7.5% realisation would be seen as acceptable by both the European Commission, which monitors Romania’s performance under the Excessive Deficit procedure, and the rating agencies, which are concerned by Romania’s wide twin deficits.
In absolute terms, the 3.4% of GDP deficit in January-May this year translates into RON 64.3 billion (nearly EUR 13 billion) and a 7% y/y advance of the gap based on the official GDP projections envisaging 1.4% economic growth this year.
iulian@romania-insider.com
(Photo source: Rochu2008/Dreamstime.com)
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