{"id":3190,"date":"2025-01-06T07:01:30","date_gmt":"2025-01-06T07:01:30","guid":{"rendered":"https:\/\/ofero.news\/?p=3190"},"modified":"2025-01-06T07:01:30","modified_gmt":"2025-01-06T07:01:30","slug":"romanias-public-deficit-tops-7-of-gdp-in-jan-nov","status":"publish","type":"post","link":"https:\/\/ofero.news\/?p=3190","title":{"rendered":"Romania’s public deficit tops 7% of GDP in Jan-Nov"},"content":{"rendered":"

Romania’s public deficit surged 71% y\/y to RON 126 billion (EUR 25.3 billion) in January-November<\/a>, particularly due to expenditure-side elements, reaching \u00a07.1% of the year’s estimated GDP in the first eleven months of the year from 4.6% of GDP in the same period of 2023.<\/p>\n

The nominal GDP is estimated to have advanced by 10% y\/y nominally and by 1% in real terms in 2024.<\/p>\n

Because Romania’s public deficit is seasonally wider in the last month of a year when part of the public works contracted are commissioned (the month’s gap was nearly 2% of GDP in 2023), the full-year deficit may come close to 9% of the GDP, in 2024. The deficit target should be set at 7% in 2025 under the fiscal consolidation plan agreed by Romania with the European Commission, resulting in a 2%-of-GDP consolidation burden this year, out of which only 0.4 percentage points (pp) were achieved under the corrective package endorsed by the government.\u00a0<\/p>\n

More radical fiscal consolidation measures are thus necessary immediately. The government’s failure to draft a credible budget plan for 2025 would increase the probability of an extremely unfavorable rating and public financing scenario for Romania.<\/p>\n

The capital expenditures in January-November, including the large-sized defense procurement deals, rose by 67% y\/y from 2% of GDP in 2023 to 3.1% in 2024. Total investments, from loans, grants, and the national budget, rose 24% y\/y to 6.5% of GDP from 5.8% in 2023.\u00a0<\/p>\n

However, other categories such as the public payroll (+24% y\/y to 8.4% of GDP), goods and services (+22% y\/y to 4.8% of GDP), and uncategorized “other expenditures” (+90% y\/y to 1% of GDP) also advanced at a high pace. Social assistance (mainly pensions) accounted for 11.6% of GDP (31.6% of the budget expenditures) after advancing by only 16.2% y\/y.<\/p>\n

The expenditures, other than investments (from grants, loans, and national budget), increased by 20% y\/y to 30.3% of GDP (+2.5pp compared to 27.8% in the same period of 2023), whereas the expenditures not including foreign grants (but the investments from the national budget or foreign loans) increased by 25% y\/y to 34.1% of GDP (+4.1pp from 30% in the same period of 2023). Both ratios should be adjusted by the 9% nominal GDP advance, resulting in real annual growth rates of roughly 10% y\/y and 15% y\/y respectively.\u00a0<\/p>\n

Overall, total expenditures increased by nearly 21% y\/y or +11% y\/y in real terms, to RON 650 billion or 36.8% of GDP (+3.2pp).<\/p>\n

The total revenues increased by 12.7% y\/y to RON 524 billion or 29.7% of GDP (+0.7pp y\/y).\u00a0In real terms, the advance was +3.4% y\/y.<\/p>\n

Revenues not including transfers from the EU budget rose by a decent rate of 17.2% y\/y (+7.5% y\/y in real terms) \u00a0to 27.6% of GDP (+1.7pp y\/y) while the transfers from the EU budget contracted by 26% y\/y to 2.1% of GDP (-1pp y\/y).\u00a0<\/p>\n

The tax revenues rose 15.7% y\/y (+6.1% y\/y in real terms) to 15.1% of GDP.<\/p>\n

The revenues from income and profit tax increased both by above 20% y\/y, corresponding to real growth rates of above 10% y\/y.<\/p>\n

By comparison, the net VAT collection rose by only 15% y\/y or a real advance of 5.5% y\/y.<\/p>\n

The Ministry of Finance eliminated from the budget execution template the “revenues from privatization” line, which was empty until October \u2013 a category for which it initially planned RON 10 billion (0.5% of GDP) but had no methodology to separate it from other categories.<\/p>\n

\u2026and reportedly hit 8.7% of GDP in full 2024<\/strong><\/p>\n

Finance Minister Tanczos Barna said on January 3 that the public budget deficit for 2024 is estimated at 8.7% of GDP. “This is the level we inherited from [former minister]. Marcel Bolo\u0219, and we hope it will remain below 9% of GDP [after final revision],” Tanczos Barna told Digi 24<\/a>.<\/p>\n

He assured that the new government would not increase VAT this year.<\/p>\n

Asked repeatedly where the government would get the money needed to cover the deficit, Tanczos Barna claimed that the money would come from the Treasury, which he said had collected [in the last months of 2024] \u00a0more than planned.<\/p>\n

The minister, however, admitted that this better collection rate came on the back of the tax amnesty.<\/p>\n

(Photo: Dreamstime<\/a>)<\/em><\/p>\n

iulian@romania-insider.com<\/em><\/p>","protected":false},"excerpt":{"rendered":"

Romania’s public deficit surged 71% y\/y to RON 126 billion (EUR 25.3 billion) in January-November, particularly due to expenditure-side elements, reaching \u00a07.1% of the year’s estimated GDP in the first eleven months of the year from 4.6% of GDP in the same period of 2023. The nominal GDP is estimated to have advanced by 10% […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-3190","post","type-post","status-publish","format-standard","hentry","category-uncategorized"],"_links":{"self":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts\/3190","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=3190"}],"version-history":[{"count":0,"href":"https:\/\/ofero.news\/index.php?rest_route=\/wp\/v2\/posts\/3190\/revisions"}],"wp:attachment":[{"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=3190"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=3190"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ofero.news\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=3190"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}