On the other hand, capital expenses fell 6.1 percent in the period in question, to RON 12.6 billion. The state used RON 20 bln, namely four percent of gross domestic product (GDP), for investments in the first eight months of this year. Revenues from value-added tax (VAT) also dropped in the first eight months of this year, by nearly 20 percent year-on-year, to RON 22.3 bln, according to data provided by the Ministry of Public Finance.
“The drastic decline in VAT revenues clearly indicates the recent drop in consumption,” said Gabriel Biris, Tax Attorney. He added that another factor which led to lower revenues is a rise in tax evasion in certain fields of activity.
Declining revenues and rising expenses in the first eight months of this year led to a budget deficit wider than initially estimated for the whole of 2009, namely 4.5 percent of GDP, up one percentage point compared to the end of July. Budget expenses soared 8.3 percent while revenues fell 6.6 percent.
“The budget deficit target agreed upon with the IMF [International Monetary Fund], although large, could be exceeded considering that expenses always rise towards the end of the year, especially in an election year,” former Minister of Finance, Daniel Daianu, told Business Standard.
