Dancila Gov't six-month stocktaking report: Budget revenues on the rise

State budget revenues in the first half of 2018 are 12 pct higher than in the similar period of the year before, Premier Viorica Dancila said on Monday, as she presented the government's six-month stocktaking report at the Victoria Palace. 

"Total budget revenues: H1 2017 - 117.2 bln lei; H1 2018 - 132 bln lei. A 12 percent increase is noticeable in state budget revenues as of mid-2018 compared to the same period of 2017. Thus, almost 15 billion lei more entered state coffers in the first semester of the current year compared to the year before. This represents a monthly increase of 2.5 bln lei or 530 million euro. This surplus was spent to support growth in the population's incomes and higher public investment," Dancila said. 

The Premier also gave a breakdown of the revenues, in a comparative presentation of income tax revenues and social contribution revenues. 

"This is where the effects of the tax reform are best visible. On the one hand, income tax revenues have dropped from 14.8 billion lei in H1 2017 to 11.7 billion lei in H1 2018. This is due to the tax cut from 16 pct to 10 pct. Therefore it was natural to have this decrease of 3.1 billion lei. On the other hand, the transfer of the contributions from employer to the employee has funneled an extra 12.6 billion lei into the state coffers, [as figures increased] from 34.2 billion lei in the first semester of 2017 to 46.8 billion lei in the first semester of 2018. We thus have a 36.8 percent surplus compared to the previous year. Adding the surplus of 12.6 billion lei from social contributions to the minus of 3.1 [billion lei] from the income tax results in a net gain of 9.5 billion lei, and neither the employees nor the employers are affected," Dancila explained. 

She also mentioned the narrowing of the pension budget deficit. "H1 2017 - 6.3 bln lei; H1 2018 - 3.2 bln lei. We thus have 3.1 billion lei more available in the state budget," the Premier added. 

The head of the government also referred to the situation of EU funding to Romania. 

"For comparison we also added the first semester of 2016, in order to address accusations that we do not attract enough European funds. (...) H1 2016 - 0.68 billion lei; H1 2017 - 5.6 billion lei; H1 2018 - 6.8 billion lei. We have an increase of 19.7 percent compared to last year, but a 10-fold difference to the first half of 2016. The differences are equally well visible if we compare the absorption percentages, with the mention that these are just mid-year figures for 2018. December 2016: a 7 percent absorption rate of European funds, Romania was trailing behind in the EU. We succeeded in unlocking the EU programs and in partially recovering the gap, so that in December 2017 the absorption rate of European funds was 16 percent and in June 2018 it was 19 percent compared to 20 percent the European average. For the end of this year we target a rate of 25 percent,'' said Dancila. 

The Premier also gave details about public investment. 

"If we look at the chart, public investments amounted to 6 billion lei in the first half of 2017. In the first half of 2018 public investments stood at 9.1 billion lei. (...) Public investments increased by more than half the amount of last year," she said. 

Speaking of foreign direct investments, the Prime Minister stressed that investors were not "impressed by the fake, alarmist" messages released by the critics of the government. 

"Foreign direct investment shows us that fortunately investors are unimpressed by the fake and alarmist news released by government critics. We have also added the year 2016 here because I would like to bring to mind past allegations that investors will quit if we raise the minimum wage as provided for in the governing program. But let us look at the figures: H1 2016 - 1.33 billion euro; H1 2017 - 1.93 billion euro; H1 2018 - 2.21 billion euro. Here we see that not only didn't investors leave, but quite the contrary, they came and confidently invested in Romania," the Prime Minister underscored.