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Surprise in budget implementation for first 4 months: revenues in April were on the rise. Budget deficit – reached 2.5% of GDP

de Marin Pana , 1.6.2020

The general consolidated budget registered for the first four months of the current year deficit of almost RON27 billion, equivalent to 2.48% of GDP estimated for the current year after taking into account the effects of the pandemic. The result is significantly weaker than in the same period of last year when it stood at only -1.08% of GDP. To note, in the end, we reached then -4.63% and now we aim for -6.73%, which tells us that the available room has somehow been exhausted.

In this context, we remind that beyond the increase in the public deficit by about RON 15.5 billion (applied to the numerator of the fraction that gives us this 2.48%) there was also a decrease occurred of over five percentage points in the economic result forecasted for 2020 in nominal terms (from RON 1,141.40 billion to only RON 1,082.14 billion (in the denominator of the fraction) and the effect is an amplification of the deficit (for now, 0.13 percentage points).

It is interesting to note, in view of the discussions regarding the “difficult legacy”, although the revenues for four months were only -1.3% below the same period of the previous year, and expenditures increased (as expected but less than that) by 12.7%, the budget deficit reached an increase of + 135%, which means it was 2.35 times higher.

But this is not the point regarding the pandemic period, but the fact that the budget revenues strictly for April 2020 were HIGHER than in April 2019, in nominal terms, by 4.7% (almost RON 26 billion compared to RON 24.81 billion in the same month from 2019). Given the inflation decreased to 2.67%, we recorded an increase of almost two percentage points even in real terms.




  • Evolution of budget implementation in the first quarter (2019-2020, billion RON)
  • 3 months ’19   4 months ’19   Apr. ’19            3 months ’20   4 months ’20   Apr. ’20
  • Revenues
  • Expenditures
  • Deficit
  • (% of GDP)


Placed at about the same level, lower amounts collected from the corporate tax (RON -573.8 million or -8.2% compared to the same period of the previous year) were offset by the amounts received from the income tax (RON +571, 8 million or + 7.9%). In the context of travel restrictions and payment postponements, taxes on property decreased by over RON 1.4 billion or -38.6%.

For now, insurance contributions, the most important revenue component of the general consolidated budget (RON 36.24 billion or 36% of the budget revenues), have maintained an increase of 1.1% in nominal terms after the first four months of the year, despite some fiscal facilities granted and the sharp decline in the activity in several economic sectors.

In indirect taxes, the decrease was -18.8% for VAT (about RON 3.7 billion less, but with some improvement compared to -19.4% at the end of March), while excise duties reached an increase of 10.3% (from 8.7% at the end of the first quarter, although for the fuel category both the level applied and consumption decreased, the increase being probably supported, based on patience, by tobacco).

Expenditures increased by 12.7%, but their evolution does not look bad in terms of structure

Over the first four months of the year, expenditures for salaries in the public sector increased by RON 14.12 billion (+ 12.7%). The amounts for social assistance advanced by RON 6.42 billion (+ 17.2%), above the general level but justifiable in pandemic conditions. It should be noted the limitation in the increase of personnel expenditures (only + 6%, less than half of the average rate) and the granting of subsidies in line with the same period of 2019 (+ 3% at average inflation for the first four months of 3.14%).


  • Budget expenditure evolution in the first four months of 2020
  • Period              3 months 2019            3 months 2020            Change           Percentage points
  • billion RON                  billion RON                  billion RON
  • total expenditure
  • of which
  • – personnel expenditure
  • – social assistance
  • – goods and services
  • – capital expenditure
  • – projects with non-reimbursable foreign financing
  • – subsidies
  • – interests


Very important, however, for the effort made by the state to limit the effects of Covid19 and lay the foundations for future economic recovery, the growth rates of capital expenditures (+ 27.7%), of projects with non-reimbursable financing (+ 20.4%) and those for goods and services (+ 19.5%) were clearly above the average of the allocations made, which should give a signal to international markets.

For now, payments for interests on loans have increased by 12.5%, in line with the overall expenditures. Which seems reasonable but should be a warning sign for future loans, especially for the phase in which we will have to comply in terms of bringing the budget deficit back to -3%.

Not for other reasons, but the access to approximately EUR 19.6 billion of NON-REIMBURSABLE funds depends on complying with the European Commission’s requirements, or, in terms of GDP, that is a net benefit offered to Romania, which according to latest Commission’s figures is estimated at 9.4% of GDP.

So, although the pandemic found us at an unfavourable time, we have the opportunity to successfully overcome the crisis and return to the trend of approaching the Western standard of living (in all aspects). It’s all about being a little less political – “well-intentioned” and more professionally pragmatic in achieving the end result.

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Publicat la data de 1.6.2020

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