May 25 (SeeNews) - Romania's consolidated budget surplus rose to 0.17% of the projected 2017 gross domestic product (GDP) in the first four months of 2017, up from 0.02% of GDP a year earlier, the finance ministry said.
Romania's consolidated budget showed a surplus of 1.35 billion lei ($333 million/296 million euro) in the first four months of the year, the ministry said in a press release on Thursday.
Consolidated budget revenue rose 8.4% on the year to 80.1 billion lei, while spending increased 6.8% to 78.8 billion lei during the four months through April, mainly due to salary hikes in the sectors of healthcare, education, local administration and culture.
Tax revenue increased 13.4% on the year and social security contributions grew 14.9%, while VAT proceeds fell 3.6% on the year in the first four months of 2017. The drop reflected a VAT cut from 20% to 19%, in effect from January.
Investments totalled 2.9 billion lei in the first four months of the year, or 0.4% of GDP, compared to 7.2 billion lei, or 0.9% of GDP in the same period of 2016.
Romania targets a consolidated budget gap of 2.99% of GDP on a cash basis in 2017, just below the EU's 3% ceiling. According to the EU's Maastricht treaty signed in 1992, the ratio of the annual general government deficit relative to GDP at market prices must not exceed 3% at the end of the preceding fiscal year.
Romania's consolidated budget showed a deficit equivalent to 2.41% of the projected GDP last year, compared to a shortfall of 10.3 billion lei, or 1.47% of GDP in 2015.
On Thursday, the International Monetary Fund (IMF) warned that Romania's budget deficit is expected to widen to 3.7% of GDP this year and to 3.9% of GDP in 2018 in the absence of additional fiscal measures.
"Staff projects a deficit of 3.7% of GDP on account of new wage and pension increases and tax cuts in the 2017 budget that will add to the effects of the previously legislated tax cuts entering into effect this year," the IMF said in a report following Article IV consultations with Romania.
The IMF advised Romania to take near-term measures to reduce the deficit focusing on expenditure re-prioritisation and the postponement of a planned pension increase, while safeguarding social spending.
Earlier in May, the European Commission too warned Romania that it may not meet its budget deficit target and urged the government to take action to avoid the opening of an excessive deficit procedure.
(1 euro=4.5496 lei)