Romania's Jan-July cons budget gap narrows to 1.94%/GDP

The consolidated budget deficit totalled 26.69 billion lei ($5.48 billion/5.48 billion euro) at the end of July, as revenue for the first seven months of 2022 rose 22.4% year-on-year to 258.5 billion lei, whereas spending increased by 16.3% to 285.15 billion lei, the finance ministry said in a statement on Friday.

Tax revenue rose by an annual 17.6% in the January-July period, social security contributions grew 9.1% and VAT proceeds jumped by 22%. Excise duty revenue rose 6.4% on the year, mainly due to higher energy products excise.

Amounts reimbursed or granted by the EU totalled 17.57 billion lei in the first seven months of 2022, up 23.3% on the year.

Investments totalled 26.44 billion lei in the seven months through July, compared to 25.28 billion lei in the same period of 2021.

Earlier this month, Romania's finance minister Adrian Caciu said the country will meet its deficit target of 5.84% of the projected GDP in 2022, despite warnings from the Fiscal Council of overestimated revenues. According to Caciu, the finance ministry also maintains its expectations for 3.5% economic growth this year.

Romania's Fiscal Council said in an analysis that the plausible cash budget deficit for this year would be around 7% of GDP, as revenues are overestimated. The Fiscal Council is a government body created in June 2010 which has the role of advising authorities in order to ensure a healthy budget.

Romania closed 2021 with a consolidated budget deficit of 6.72%, compared to a budget gap of 9.61% in 2020.

Romania is in an excessive deficits procedure applicable since April 2020 because it has exceeded the EU's 3% budget deficit threshold set by the Maastricht Treaty.

(1 euro=4.8734 lei)