The Ministry of Finance announced that, according to the current working data, the implementation of the general consolidated budget in the first two months of 2017 ended with a surplus of 397.1 million lei, or 0.05% of GDP, compared to 788.1 million lei or 0.10% of GDP recorded in the same period of 2016.
The press release of the Ministry of Finance has been prefaced by the optimistic statements of Prime Minister Grindeanu, who announced Monday morning without any further details that the budget implementation is very good in the first two months, having a surplus of „several billion, I guess.”
What it is behind the surplus:
- The budget implementation in the first months of the year usually ends with a surplus; it should be noted, however, that the surplus reported in January/February 2017 decreased by half compared to 2016
- The increased revenue from social security contributions and taxes is the result of the wage increases entered into force on 1 January
- The increase recorded in the „revenues from other taxes on goods and services” section is spectacular just as a percentage, as it is mainly related to the revenue from the clawback tax paid in Q4 2016 and the amount is not significant
- The other indicators are “in the red”: revenues from VAT (partly because of the tax cut) and lower excise duties, increasing staff costs (because of the same wage increases), increasing subsidies, declining expenditure for goods and services, rising social assistance costs
Figures from the official press release:
The revenues of the consolidated general budget, amounting to 34.9 billion lei, which represents 4.3% of GDP, were 1.4% lower, in nominal terms, compared to the same period of the previous year.
There have been increases compared to the previous year in the following:
- Revenues from wage and income tax (+ 13.6%)
- Social contributions (+ 11.9%)
- Taxes on foreign trade and international transactions (+ 18.8%)
- Capital revenues (+ 76.8%)
Revenues from other taxes on goods and services have increased by 90.9% compared to the same period of the previous year, this growth being mainly the result of the evolution in the tax collection related to the contribution due for medicines, as well as the cost-volume/cost-volume-result contracts financed from the single national fund for health insurance.
In terms of VAT revenues, they have decreased compared to the first two months of 2016 by 15.8%, following the decrease of the standard VAT rate from 24% to 20%, as of 1 January 2016, which has been reflected in the revenues starting February 2016. Furthermore, the effects of the VAT cut from 20% to 19% are also visible in the revenues, starting February 2017.
Revenues from the excise duty were 5.3% lower compared to the same period of the previous year, being negatively influenced by the reduction of the excise on some energy products applied starting 1 January 2017.
Consolidated general budget expenditure, amounting to 34.5 billion lei, decreases by 0.3% in nominal terms compared to the same period of the previous year and its share of GDP decreased by 0.3 percentage points.
Staff costs increased by 13.3% compared to the same period of the previous year, as a result of the wage increases granted in the second half of 2016, respectively the application, as of August 2016, of the provisions of OUG 20/2016 amending and supplementing the Government Emergency Ordinance 57/2015 on the remuneration of the staff paid from public funds in 2016, the extension of some deadlines, as well as some fiscal-budgetary measures and amending and supplementing some pieces of legislation, as well as a result of the salary increases applied in 2017, namely the 15% wage increase for the healthcare and education sectors, applied as of 1 January 2017.
Goods and services expenditure has decreased by 5.1% compared to the same period of the previous year, major decreases being recorded in the institutions financed from own revenues and subsidies (9.4%), as well as in the local government (6.1%).
Interest rates are 4.1% lower compared to the same period of the previous year and maintained at the same level in terms of share of GDP, namely 0.2%.
Subsidies increased by 51.1% compared to the same period of 2016, the main source of growth coming from the subsidies to support farmers.
The social assistance expenditure has increased by 9.4%, y-o-y, mainly influenced by the 5.25% increase of the pension point as of 1 January 2017, which reached 917.5 lei (OUG 99/2016 ) and other measures approved in 2016 which contributed to increasing the social spending, such as: the increased number of welfare recipients, following the exception applied to the state allowance for children in evaluating the family income for calculating the social welfare (VMG); the increase of the allowance granted to adults with severe visual impairment by applying a 25% increase to the net salary of the early stage social assistant with a secondary education qualification from the state social assistance units, other than those with beds, and the increased number of persons with various types of disability; the increase and change of the method for establishing the monthly child allowance and the insertion incentive; service pension for court clerks, aeronautical staff, civil servants from the Parliament, auditors from the Court of Accounts.
Investment expenditure, including the capital expenditure and the expenditure related to the development programs financed from internal and external sources, was 870.1 million lei, representing 0.11% of GDP.
