In the first five months of the year, goods and services expenses leapt by 10.5% compared with the first five months of 2010 period, to RON11.8 billion. Goods and services expenses rose each year and not even the crisis managed to stall them.
Expenditure declines against the first five months of last year were registered in the case of subsidies (-21.3%), personnel (-19.9%), capital (-5.4%) and social assistance (-3.1%), according to Finance Ministry data.
Instead, interest expenses rose by 34.7% in the wake of debts contracted to finance the budgetary gaps accumulated from previous years and the current ones.
As for revenues, the increase in valued added tax (VAT) receipts by 33.3% in May to RON3.6 billion and the 46.8% higher receipts from excises against the same month of last year, to RON1.6 billion, drove revenues up 9.2% in May, to RON12.7 billion.
In the first five months of this year, total revenues reached RON70.7 billion, up 10.1% from last year, mainly on the rising receipts from VAT, excises and capital income. Expenditures fell by 3.4% compared with the first five months of last year, to RON78.2 billion.
While in April the general budget registered a RON829 million surplus, in May the deficit revolved around RON3 billion. For the first five months, the budgetary gap hit RON7.4 billion, accounting for 1.36% in GDP.
“A quite wide deficit was registered in May. But we must take into account that quarterly profit taxes were collected in April. The Finance Ministry is on schedule to reach the mid-year deficit target. And should there be no slippage, the annual deficit target of 4.4% in GDP can also be hit,” commented Ionut Dumitru, president of the Fiscal Council.
The budgetary imbalance topped the initial estimates of Finance Minister Gheorghe Ialomitianu and of Romania’s representative with the International Monetary Fund (IMF), Mihai Tanasescu.
Analysts believe the budgetary gap target set for the middle of the year, 2.3% in GDP, can be achieved and so can the annual target set at 4.4% in GDP. But, should the deficit further widen over the next seven months at the pace seen in May, of RON3 billion, a gap of RON28 billion would be registered, above the annual target of RON24 billion.
“I said the April surplus is temporary, unsustainable. It came amid the adjustment of some expenses, especially investment expenses,” commented Nicolaie Chidesciuc, chief-economist with ING Bank. “Some projects were probably halted. The gap widening could indicate the projects were resumed. If this is the explanation, then the trend is positive.”