Romania's budget deficit three times higher in the first quarter of 2020

Romania registered a budget deficit of 1.67% of GDP (18.06 billion lei), in the first quarter of this year, about 3 times higher than in the same period of the previous year (0.52% of GDP) , said the Ministry of Public Finance.

The revenues of the general consolidated budget amounted to 72.23 billion lei in the first 3 months of 2020, decreasing by 3.3% compared to the level recorded in the same period last year, mainly reflecting the contraction of budget revenues in March (-25 , 1% year / year) as a result of the fiscal facilities granted to support the economy in the context of establishing the state of emergency.

The total value of fiscal obligations declared to ANAF in March 2020 was 24.63 billion lei, increasing by 8.5% compared to the amounts declared in the similar period of 2019, the net revenues collected were 16, 95 billion lei.

VAT revenues registered 12.29 billion lei in the first three months of 2020, down 19.4% compared to those recorded in the same period last year, mainly due to the significant decrease in net revenues in March (- 82.5%). Although the relevant macroeconomic base - turnover in trade, services and industry registered a dynamics of 12.2%, net revenues were influenced by the acceleration of VAT refunds which reached a record level in March (additional refunds of 3.2 billion lei compared to the first quarter of 2019) 1 and the fiscal measures adopted during the state of emergency.

Regarding the receipts from the salary tax, after the significant positive advance from January-Feb (10% year / year) and in the context of the acceleration of the dynamics of the salary fund (to 9.4% year / year in February 2020), the month March shows a decrease in these revenues (-9% year / year), as a result of the implementation of fiscal measures related to the emergency period.

Revenues from the profit tax amounted to 2.86 billion lei in the first quarter of this year, down 32.0% (-1.35 billion lei) compared to the corresponding period last year. This negative evolution is explained by the postponement of the payment of some fiscal obligations in March by the taxpayers paying profit tax (GEO no. 29/2020). The structure of income from income tax shows reductions in revenues from economic agents by 26.9% and commercial banks by 76.2% in the first quarter of 2020.

On the expenditure side, the increase of investment expenditures by about 1 billion lei compared to the same period of the previous year, as well as the advances of national aid in the agricultural sector in the amount of about 1 billion lei contributed to the increase of the deficit.

Investment expenditures, which include capital expenditures, as well as those related to development programs financed from internal and external sources, amounted to 5.85 billion lei, 20.4% more than the same period of the previous year. In March, 154.7 million lei were paid from the budget of the Ministry of Internal Affairs for the purchase of emergency medical products and equipment to combat the spread of SARS-VOC-2 coronavirus infection.

Expenditures of the general consolidated budget in the amount of 90.30 billion lei (8.3% of GDP) increased in nominal terms by 12.7% compared to the same month of the previous year. Expressed as a percentage of Gross Domestic Product, expenditures increased by 0.8 percentage points from 7.6% of GDP in 2019 to 8.3% of GDP in 2020.

Personnel expenses amounted to 26.22 billion lei, up 9.4% compared to the same period last year. Expressed as a share of GDP, staff expenditure represents a level of 2.4% of GDP. Expenditures on social assistance were 32.77 billion lei, an increase of 17.0% compared to the same period of the previous year.

"The increase in the budget deficit for the first quarter of this year, compared to the same period last year, is mainly explained by the unfavorable evolution of budget revenues in March due to the postponement of the payment of tax obligations by economic agents during the state emergency (7.7 billion lei) and additional VAT refunds of 3.17 billion lei to support liquidity in the private sector ", says the Ministry of Finance Florin Citu.