Seven-month budget deficit hits 3.9 pct of GDP
Date: 30-08-2010
The consolidated budget execution over the first seven months of the year closed with a deficit of 20 billion lei (some 4.7 billion euros), representing 3.9 percent of the Gross Domestic Product, shows data released on Friday by the Ministry of Public Finance (MFP). Revenues to the consolidated budget stood at 93.3 billion lei, up 1.2 percent, outperforming the execution of the similar period in the year before.
Revenues increased primarily on VAT collections, where the y-o-y difference narrowed from minus 3.7 percent on June 30, 2010 to 0.8 percent; and on excise tax collections, which were 12.3 percent higher to the state budget and up 7.7 percent to the consolidated budget, respectively.
The rise in VAT collections was notable in particular in June and July, whereas the influence of the VAT rate increase from 19 percent to 24 percent will become visible beginning August.
Excise revenues went up under the effect of higher excise rates applied as of January 1, 2010, of the higher average RON / EURO exchange rate considered for the payment of excises this year, as well as of the rise in the excise rate for particular products.
According to MFP, important imbalances persist as regards the profit tax (minus 3.2 percent), the income tax (minus 5.4 percent), and social security contributions (minus 5.3 percent), but collections from non-fiscal revenues went up by 1.998 million lei, and so did refunds to the European Commission on behalf of the EU-financed projects, by RON 1.033 bln.
Consolidated budget spending was 113.3 billion lei, up 3.2 pct in nominal terms from the same period last year.
Personnel expenditures from the consolidated budget went down 4.7 pct, but increased 3.5 percent from the state budget, following the reorganization of public institutions, which - beginning November 5, 2009 - switched from financing from their own revenues and subsidies to full financing from the state budget, according to Law No. 329/2009.
Expenditures with goods and services fell 2.2 percent against the same period of 2009. The bulk of the decrease was registered with the state budget - down 24.8 percent, while this category of expenditures is 7.8 percent higher with local budgets. However, the overspending registered with local governments kept going down, standing 1.9 percentage points below the level registered the month before.
The rest of expenditure types overall followed an upward trend from the same period last year, on account of the rise in budget deficits piled up in the previous years and the engagement of loans to plug in the deficits, which incurred spending on interest rates (plus 27.4 percent), and of the budget effort with EU-funded programs (plus 152.3 percent) and those financed from external loans (plus 11.2 percent).
Investment expenditures, which include capital expenditures, as well as investment programs funded from internal and external sources over the first seven months of the year amounted to 14.4 billion lei, or 2.8 percent of GDP respectively, Agerpres reports.
