October 26 (SeeNews) - Romania's consolidated budget showed a nine-month deficit equivalent to 0.49% of the projected 2016 GDP, according to finance ministry data.
Romania's consolidated budget deficit totalled 3.7 billion lei ($896 million/823 million euro) in the January-September period, as revenue fell 2% on the year to 165.8 billion lei, while spending rose 4% to 169.5 billion lei, finance ministry data released late on Tuesday showed.
In the like period a year earlier, Romania's consolidated budget showed a surplus of 6.16 billion lei, equivalent to 0.87% of its GDP.
In the January-September period of 2016, revenues from income tax increased 12.3%, excise duties climbed 6.4%, and social security contributions increased 6.9%.
On the other hand, VAT revenue decreased by 8.6%, reflecting a VAT cut from 24% to 20% in January 2016 and a reduction to 9% for some food items, in effect from June 2015.
Investments totalled 17.3 billion lei, or 2.3% of GDP, for the first nine months of the year. By comparison, in the first nine months of 2015 investments amounted to 19 billion lei, or 2.7% of GDP.
For the January-August period, Romania's posted a budget deficit equivalent to 0.4% of GDP.
Romania targets a consolidated budget gap of 2.95% of GDP on a cash basis in 2016, below the 3% EU ceiling. The country's consolidated budget for 2015 showed a deficit of 1.47% of GDP, below the 1.85% limit set in the fiscal strategy for that year.
Raiffeisen Bank analysts commented on Wednesday that given that the 2016 budget deficit target was set as high as 2.8% of GDP, the authorities have space to make a lot of public expenses in the fourth quarter, so as to achieve a deficit of 2.3% of GDP.
For their part, ING Bank analysts said: "Ending the year on a narrower level than the -2.8% of GDP level (cash-based) would be mostly the result of low capital expenditures (including related to EU funds). Based on figures for the first half of 2016, these accounted for close to two thirds of the difference between planned and effective spending," ING Bank analysts said in a daily comment on the financial markets.
On the other hand, the increase in expenditures relative to last year is largely due to increased pensions and wages, ING analysts said.
"Last year, the government managed to near its year-end target thanks to a big push in EU spending as the previous multi-annual budget drew to a close. But this cannot be the story this year, so there is a significant possibility of an undershooting of the year-end fiscal gap target - after 2008, the finance ministry ran, on average, a gap of -1.7% of GDP in the fourth quarter with back-loading of investment spending," ING analysts concluded.
(1 euro=4.4909 lei)