Romania’s cons budget gap inches down to 5.68%/GDP in 2023

The consolidated budget deficit totalled 89.902 billion lei ($19.674 billion/ 18.079 billion euro) at the end of 2023, as revenues rose 13.3% year-on-year to 521.447 billion lei, whereas spending increased by an annual 13% to 611.349 billion lei, the finance ministry said in a budget report published on Wednesday.

The rising dynamic of revenues was mainly supported by the inflow of European funds, as well as income tax and insurance contributions. Favourable but more moderate developments were also recorded for VAT revenues, corporate tax and non-fiscal revenues. Amounts reimbursed or granted by the EU totalled 67.71 billion lei in 2023, up 39.8% on the year.

Total spending amounted to 38.6% of GDP in 2023, unchanged from the previous year, despite the annual growth in nominal terms.

Social assistance expenditure amounted to 31.2% of all spending, while staff expenses and the costs of goods and services accounted for 21.7% and 12.6%, respectively.

Investments totalled 100.66 billion lei in 2023, up by an annual 38.8%. Non-refundable external financing sources represented 61.58% of total investment expenditure.

Romania’s budget plan for 2024 projects a budget deficit equivalent to 5% of GDP and higher revenues spurred by an expected economic growth of 3.4%.

The International Monetary Fund (IMF) on Thursday projected fiscal deficits exceeding 6% of GDP for Romania in the next few years, urging the country to boost its fiscal consolidation efforts to restore the soundness of government finances by enacting substantial policy reforms.

(1 euro=4.9728 lei)