Budget deficit growth pace slows down in August

The Finance Ministry managed to slow down the growth of the budget deficit to about one quarter of the average of the previous months.

The budget deficit rose by almost one billion RON in August and reached 20.9 billion RON (5 billion euros), that is about 4.1% of GDP compared with the annual indicative target of 6.8% of GDP, Finance Ministry sources say.
The growth pace of the deficit slowed down after the almost two billion RON increase in July and the monthly variations of over four billion RON in the spring.
Revenues went up by 13.8% to 106.25 billion RON in August, while spending progressed by 12.2% to 127.16 billion RON.
"The deficit was quite low in August. The public sector salary cut has already showed as it dragged spending down quite a lot. Revenues probably went up, as a result of the VAT hike," commented Nicolae Chideşciuc, chief economist of ING Bank.
He added that a possible explanation for the low deficit level might be the fact that arrears were not paid in August but largely in September. As a result, he expects the deficit to see a higher increase in September, by 1.5-2 billion RON.
Cutting arrears down to zero was the main requirement of the IMF during its previous review mission so that the state would stop being an arrearage-generating factor in the economy.