Budget deficit up to 0.88 pct of GDP in 5 months, almost 4-fold higher than in 2017

The general consolidated budget recorded a deficit of 8.14 billion lei, 0.88% of the GDP, in the first five months of 2018, almost 4-fold higher against the same interval in 2017, when the deficit accounted for 2.2 billion lei, 0.27% of the GDP, according to operative data of the Ministry of Public Finance, published on the website of the institution on Wednesday.

The general consolidated budget revenues, worth 110.9 billion lei, 11.9% of the GDP, were 12.7-fold higher, in nominal terms, compared with the same period last year.

Compared with last year, there were recorded increases in the contributions to social securities (+35.5%) and non-fiscal revenues (+11.4%).

"Starting from February, collections from social contributions positively influenced the new legislative conditions with respect to the transfer of contributions from the employer to the employee, as regulated by GEO no. 79/2017," specified the MFP.

In May 2018, according to the MFP, there was seen an improvement in the collection of revenues from VAT, which increased by 16.8% compared with May 2017, up to 21.98 billion lei January through May, which is a growth by 4% versus the same period a year ago. Revenues from excises totalled 11.06 billion lei (1.2% of the GDP), by 13.7 per cent higher compared with the same period last year. Moreover, collections from taxes on property increased by 6%.

Drops were recorded in the collections from the tax on salaries and income tax by 19.7%, because of the cut starting January 1 2018 of the tax from 16% down to 10%, a measure that could be seen reflected in collections starting with February 2018. Moreover, there was recorded a drop by 23.4%, against last year, in the tax on the use of property, authorization of the use of property or on activities carried out based on the application of GEO no. 27/2017 regarding the restitution of the amounts representing the special tax on motor-vehicles, pollution tax for cars, tax on pollutant emissions from motor-vehicles and environmental stamp for motor-vehicles.

The amounts from the European Union in the context of payments made totalled 6.03 billion lei, by 31% higher than the ones collected in 2017, in the same interval.

On the other hand, general consolidated budge expenditures totalled 119 billion lei, by 18.4 per cent higher compared with the first five months of 2017. Expenditures on personnel were by 22.3% higher, the growth being determined by the salary increase granted based on the framework Law no. 153/2017 regarding the salaries of the personnel paid from public funds, and expenditures on goods and services increased by 10.2 per cent.

Significant increases were recorded both in the local budgets and in the budget of the single national social security and health fund and the budgets of public institutions financed from own funds and subsidies from the budget. The subsidies were by 1.9 per cent higher compared with January-May 2017. Interests grew by 34.9 per cent, 0.6 per cent of the GDP respectively, with a payment peak recorded in April, considering the cumulation of the data regarding the payment of interests related to many benchmark bonds, which situation was reflected in 2017 in the budget execution in June, specified the MFP.

Expenditures on social assistance grew by 10.5 per cent compared with last year, being mainly influenced by the 9% increase in the pension point as of July 1 2017, reaching up to 1,000 lei, the increase and modification of the modality of establishing the monthly pay for child care and the incentive for the mothers who returned to job earlier.

Moreover, expenditures on investments, which include capital expenditures, as well as the ones related to the development programmes financed from internal and external sources, accounted for 7.4 billion lei, by 1.8 higher then the same period last year.