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Romania’s public deficit rose 3.2 times in January-October to EUR 4.5 bln

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Romania’s general consolidated budget, which includes fiscal and social budgets of the government, registered after the first ten months of this year a deficit of RON 21 billion (EUR 4.5 billion), or 2.2 percent of estimated GDP, being 3.2 times bigger compared with the same period of 2017, according to the Finance minister Eugen Teodorovici, http://business-review.eu reads.

The minister claims that the government will keep the deficit at 3 pcercent of GDP by end-2018, according to hotnews.ro.

The Finance Minister hasn’t year released the budget details for the first 10 months of this year.

After the first ten months of 2017, the public deficit was RON 6.62 billion (EUR 1.45 billion), or 0.8 percent of GDP.

The European Commission has recently established that Romania took no effective actionin response to the Council recommendation of June and now proposes a revised recommendation of an annual structural adjustment of at least 1 percent of GDP in 2019.

In January-September 2018, budget revenues rose 13.6 percent against the first nine months of 2017 but expenses surged by 18.4 percent.

The general budget in the first nine months of 2018 closed with a deficit of RON 16.8 billion, or 1.77 percent of GDP, Finance Ministry data show.

Finance minister’s declarations suggest the deficit for the month of October was close to RON 4.2 billion (around EUR 900 million), making it more difficult for the government to maintain the fiscal gap below its official target of 3 percent of GDP.

Revenues from social contributions rose by 37.3 percent in January-September, VAT revenues increased 9 percent, while revenues from income tax declined by 25.3 percent compared with January-September 2017.

In the same time, budgetary wage expenses increased by 25.3 percent during the first nine months and capital expenses soared 46.7 percent.

Expenses with goods and services increased by 9.2 percent compared with the same period of 2017.

But experts are particularly concerned about the rapid increase of government’s interest expenses.

Official data show that interest expense rose by 21.5 percent during the first nine months of this year, to RON 9.7 billion, from RON 8 billion in January-September 2017.

Higher deficits can make it more difficult for the Romanian government to raise funds in order to finance the public debt.

Romania is already EU’s member state which pays the highest interest rates for its debt (3.96 percent per year in 2017) and recent Eurostat data showed Romania posted the highest annual inflation rate among the European Union member states for eight months in a row this year.

Romania’s sovereign 10-year bonds yield, a barometer for the cost of financing in the economy, reached this year a 4-year high of more than 5 percent, amid growing concerns regarding the health of public finances.



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