Romania’s budget issue: toxic mix of “American” revenues and “European” spending

Relatively recently joined the functional market economies club, although it has multiple pending development (not just economic) issues, Romania looked around and chose a poisonous… Mai mult

Spectacular GDP growth in Q1: 5%, in the context of rhythm decline in manufacturing to just 1.2%. Dilemmas

Gross Domestic Product for the first quarter of 2019 increased by 5% in real terms compared to the same period of the previous year (5.1%… Mai mult

Equation of public employees in Romania’s expenses compared to EU

Simply put, data recorded over time in the monthly budget implementation published by the Ministry of Finance indicate a share of staff costs in total… Mai mult

Foreign groups of enterprises in Romania and areas where they operate. Hierarchy changes

Germany (16.9%), France (11.7%) and Italy (9.5%) are the countries with the largest share in Romania’s economy by the number of employees in 80,905 groups… Mai mult

Budget implementation in Q1, short and simple: wages and social spending up, general and local investments down, co-financing for projects implemented with European money down

The general consolidated budget recorded, after the first two months of 2019, a deficit of about RON 5.5 billion, equivalent to 0.54% of the GDP… Mai mult


Income inequality in EU states: Romania goes down to 3rd position

de Marin Pana , 29.5.2018

The inequality of income distribution in Romania has diminished in the last two years, and official statistics rushed to send out the improvement in this fundamental social indicator with the values estimated for 2017 (most of EU countries are still in the stage of reporting results for 2016), so our country went down from the first position after the crisis to the 3rd.

With an improvement from the maximum level of 8.2 of the ratio between the total income share assigned to 20% of the population with the highest income and the total income share assigned to 20% of the population with the lowest income (income should be understood as available equivalent income) to 7.0, we were positioned in the Eurostat chart below Bulgaria and Lithuania.

See charts:

Simply put, the richest Romanians gained last year seven times more than the poorest compatriots, which is a slight improvement compared to the year when we managed to bring GDP at the same level, in real terms, as before crisis (GDP 2014 = GDP 2008, after technical adjustments of the nominal values recorded).

How relation between the rich and the poor evolved

To keep in mind, in the first year after the EU accession, when the European social inequality indicator was calculated according to the European methodology, to ensure comparability with other states, we reached a relatively high level. Somewhat paradoxically, the crisis led to the low conjectural value of 6.1 (anyway above the European average of 4.9 registered that year), to which the intervention of the judiciary for cancelling the adjustment of the pension point played an essential role.


  • Evolution of income ratio between the rich and the poor in Romania
  • Year
  • Income rich/poor


Incidentally or not, after we went up with the target indicator to a local maximum level right in the year when we best managed national deficits (especially the fulfillment of the well known MTO – Medium Term Objective – along with a general consolidated budget deficit of only -0.8% of GDP, but also the current account deficit of only -1.2% of GDP, about one third compared to 2017), we reached exactly the 2008 value, namely the level before the crisis.

The good part is that we have somewhat reduced gaps between the richest and the poorest Romanians, the less good part is the way we did that. Increasing social benefits makes sense and is European in its essence, but it would have been much more useful and sustainable if going out of poverty had taken place based on productive jobs (we are still the country with the highest percentage of poor employees in the EU).

How we stand compared to other EU states

The data presented below show developments in some of the EU countries, according to Eurostat reports for 2007, 2010 and 2015-2017, so that we compare ourselves with countries in the region which are close to our development level, as well as with big Western democracies. We can see that, along with our neighbours from the south of the Danube, we are far outside the European practice.


  • Evolution of the income ratio between the rich and the poor in some EU countries
  • Country


It is worth noting the stability of this indicator in the Central European countries that also have been colleagues in the socialist bloc and have maintained ever since a certain approach to social relations and the distribution of wealth, closer to the European values of French or German type, even with Nordic influences in the case of the Czech Republic (the champion of European income equality) and Slovakia.

As a model, we could take again, as in other economy-related situations, Poland. A model that gradually evolved in the sense of a slightly smaller ratio between the incomes of the richest share of the population and those of the poorer share, with a convergence, quite transparent, towards the Western neighbour, Germany. Also influenced, in its turn, by France.

Unfortunately, though, by Latin similarities, we look more like Spain and Italy, countries where social inequalities are higher than in the rest of the Western world and which have seen wider changes in recent years.

It should also be underlined the Eurostat findings, which show that, compared to the reference year 2008, Latvia registered the largest decline in income inequality (from 7.3 to 6.3), which shows that things can go in the direction of reducing gaps in a steady rhythm, where there are a political will and real adherence from the population.

Interestingly, next countries in this ad hoc ranking are the UK (-0.5pp, from 5.6 to 5.1), Belgium (0.3 pp, from 4.1 to 3.8, which means that even though the situation was already good enough, they still bothered to bring the equalization of incomes) and, beware, Poland (0.3pp, from 5.1 to 4.8, but by 0.5pp compared to 2007).

On the opposite side, Bulgaria (+1.7 pp, from 6.5 in 2008 to 8.2 in 2017), Italy (+ 1.1pp, from 5.2 to 6.3), Spain (+1 pp, from 5.6 to 6.6) and Lithuania (+1 pp, from 6.1 to 7.1).

The link between the rise in inequalities and economic performance somewhat weaker than other similar states seems quite clear, which implies that the increase in social inequalities does not help the development in the medium and long term.

Mergeți în homepage ›

Publicat la data de 29.5.2018

Lăsați un comentariu


4.2%, from 3%: BNR has increased inflation forecast for 2019

The National Bank increased the inflation forecast for 2019 by 1.2 percentage points, from 3% to 4.2%. Also, the forecast for 2020 goes up by… Mai mult

Emergency procedure at European Court of Justice for Romania’s question: Are MCV recommendations mandatory?

The Court of Justice of the European Union (CJEU) has decided that Bihor Court’s request to be discussed under the emergency procedure, which is a… Mai mult

Government decides to increase external borrowing ceiling by EUR 4bn. It has consumed program resources for two years

The Government's agenda for Wednesday also includes the draft decision to increase the foreign loans ceiling for 2019 and 2020 by EUR 4 billion, up… Mai mult

Preparations for Summit in Sibiu - European Commission’s recommendations for EU's strategic agenda

On Tuesday, the European Commission presented a series of policy recommendations on how Europe can shape its future within an increasingly uncertain and multipolar world.… Mai mult

Meeting between Prime Minister Viorica Dancila and Chinese Prime Minister Li Keqiang: talks on a possible involvement of Chinese companies in PPP projects in Romania

On Friday, Prime Minister Viorica Dancila had a meeting with Chinese Prime Minister Li Keqiang, during which she stated her interest in involving Chinese companies… Mai mult

So-called "Belina Law" was adopted. Opposition will refer CCR: it turns Belina Island into a fiscal paradise

The Chamber of Deputies adopted on Tuesday the bill that provides for a derogating tax regime, such as tax exemptions or reductions, for land and… Mai mult

Deveselu shield is undergoing an upgrade process; the US provides alternative defence capabilities with THAAD systems

Aegis Ashore anti-missile system installed at Deveselu 99 Military Base will go in the next period through a previously planned upgrade process, the MApN announced… Mai mult

How 2019 began: Investments, allocations by 78.5% lower than the same period of 2018. 21% decrease in co-financing for attracting European funds

The consolidated general budget recorded a deficit of 0.5% of GDP in the first two months of 2019 namely RON 5.2 billion, a "performance" only… Mai mult

Romania's GDP exceeded Portugal’s in 2018: which has a population two times lower and a GDP/inhabitant twice as high

Romania's economy exceeded, at current prices in euros, Portugal's economy in 2018, a country with a population and a surface two times smaller as Romania.… Mai mult

Document / Draft to amend "Greed Ordinance"

The Ministry of Public Finance published Tuesday evening, a day and a half before the approval in the Government, the draft OUG that amends the… Mai mult

The two OUGs on judiciary for the three files are ready and submitted to Government

The Justice Ministry has prepared the two OUG drafts for which the coalition has put much pressure on the Justice Minister Tudorel Toader before granting… Mai mult

ECOFIN / Tax havens list has been updated. Politico: Eugen Teodorovici took EU Finance Ministers by surprise

Finance Ministers of the EU voted on Tuesday at the third meeting of the Council for Economic and Financial Affairs (ECOFIN) chaired by Romania, the… Mai mult

March 15, 15:00, for 15 minutes: Romania really wants highways!

Dozens of companies, mayoralties, sports teams, public figures, organizations and many ordinary people joined the protest "Romania wants motorways". Of course, the country did not… Mai mult

Facebook has removed 30 pages and PSD propaganda accounts in Romania

Facebook announced Thursday that it has closed hundreds of false accounts promoting false content in the UK and in Romania and this is the first… Mai mult

Laura Kovesi, indicted in a second case opened by Magistrates' Investigation Section

Laura Codruta Kovesi was indicted on Thursday in a second case. The section for investigating the crimes committed by magistrates accused her of having led… Mai mult