Romania: Smallest budget surplus in 7 years

January is traditionally a month of budget surpluses, but 2019's is the smallest in seven years. Not having an approved budget bill likely distorted the pattern and actually helped keeping spending in check

In January 2019, the general budget recorded a RON0.7 billion budget surplus, equal to +0.07% of GDP, compared to +0.21% of GDP in 2018. Total revenues are 15% higher than in January last year while expenditures advanced by 22.7%.

The wage envelope represented 30.2% of spending in January. Adding the social expenditures, we get a share of rigid spending out of total expenditures of 71.3%, slightly more than in January 2018.

January expenditure composition

The 2019 budget approved by parliament (currently being challenged in Constitutional Court by the Presidency, hence not yet enforceable) envisages a fiscal deficit of 2.76% of GDP. For now, it’s definitely too early to judge the likelihood of meeting the budget target. Nevertheless, as we assumed last year, the government could meet the 3.0% budget deficit threshold if the commitment to avoiding the excessive deficit procedure (EDP) does not imply a high political cost.