The budget deficit is 3.3% of GDP after 7 months

Ionuţ Dumitru, Chief Economist of Raiffeisen Bank Romania, told Business Standard that a 3.5 percent deficit after seven months is the result of a deeper-than-expected recession and of expenses which have not been sufficiently corrected.

“The new budget revision makes significant corrections on both revenues and expenses, offering a greater chance for meeting the 7.3 percent target by year-end,” Dumitru said.

The state budget registered revenues some seven percent lower and expenses 7.4 percent higher year-on-year in the first seven months of 2009, according to data provided by the Ministry of Finance. Revenues from the profit tax were eight percent lower in June than in the same month in 2008 (RON - 521.2 million / some €123.6 mln), and 14.4 percent lower in July, compared to July 2008 (RON - 1.36 billion / €0.32 bln). However, revenues from the profit tax rose in July compared to June by approximately €1 billion, to some €4.79 bln. “The higher revenues from the profit tax in July compared to June come mainly from the fact that July was a month of payment deadline, but we can also talk about a slight rebound in the economy.

The decline shows signs of slowdown,” economic analyst Bogdan Baltazar told Business Standard. In terms of expenses, personnel-related costs soared 17.5 percent in July compared to June, namely to RON 4.376 bln (€0.82 bln).