Deficit of 1.58 pct of GDP after the first two months of 2025

The budget deficit stood at 1.58% of GDP after the first two months of 2025, compared with 1.64% of GDP in the same period last year, according to data released Wednesday by the Ministry of Finance."The execution of the consolidated general budget in the first two months of 2025 ended with a deficit of 30.24 billion lei, or 1.58% of GDP, compared with a deficit of 28.99 billion lei, or 1.64% of GDP for the first two months of 2024," the document from the Finance Ministry reads.In January, the budget deficit was 0.58% of GDP.After the first two months, total revenues amounted to 89.66 billion lei, up by 3.5% (year-over-year), supported by the increase in current revenues - mainly salary and income taxes, insurance contributions, and excise duties, while expenditures, amounting to 119.90 billion lei, increased in nominal terms by 3.7% compared to the same period of the previous year.On the revenue side, there were contractions in net VAT (higher VAT refunds in the first two months of the year-over-year) and European funds receipts. Expressed as a share in GDP, total revenues adjusted by 0.22 percentage points, due to the decrease in European funds, while current revenues remained almost constant.Receipts from salary and income taxes totaled 11 billion lei, recording an increase of 42.2% (year-over-year), generated by the significant increase in receipts from tax on dividends (+179%), on account of dividends distributed in 2024, with the retention of the 8% tax rate.Revenues from excise duties amounted to 6.97 billion lei, registering an increase of 11.4% (year-over-year), supported by the positive evolution of excise duties on energy products (+22.5%). At the same time, excise duties on tobacco products registered a more moderate dynamics of 4.1%. The monthly evolution of excise duty receipts is generally more volatile, determined by the policy of economic operators of tax warehousing of excisable products.Non-tax revenues amounted to 6.63 billion lei - similar to the level recorded in the first two months of 2024. The amounts reimbursed by the European Union on account of payments made and donations totaled 4.41 billion lei, down by 46.4% (y/y).On the other hand, the expenditures of the consolidated general budget in the amount of 119.90 billion lei increased in nominal terms by 3.7% compared to the same period of the previous year. Expressed as a percentage of Gross Domestic Product, expenditure in 2025 decreased by 0.2 percentage points compared to the same period of 2024, from 6.5% of GDP to 6.3% of GDP.Personnel expenditure amounted to 28.10 billion lei, up by 16.2% compared to the same period of the previous year. Expressed as a share in GDP, personnel expenditures account for 1.5% of GDP, 0.1 percentage points higher than in the same period of the previous year.Expenditure on goods and services amounted to 14.74 billion lei, up by 2.4% compared to the same period of the previous year. An increase of 16.3% is reflected in the budget of the Single National Fund for Social Health Insurance, for the reimbursement of medicines with and without personal contribution and medicines used in national health programs.Interest expenditure amounted to 10.06 billion lei, 3.39 billion lei higher than in the same period of the previous year.Social assistance expenditure amounted to 42.78 billion lei, up by 10.4% compared to the same period of the previous year, due to the implementation of the measures for recalculation of public pensions starting September 1, 2024, in accordance with the provisions of Law no. 360/2023 of November 29, 2023 on the public pension system.   The social assistance expenses were also influenced by payments from the state budget for the compensation of bills related to the consumption of electricity and natural gas, respectively for the two months of 2025, amounted to 528.62 million lei, the Ministry of Finance said.Expenditure on subsidies amounted to 1.75 billion lei, mainly representing subsidies for passenger transport and support for agricultural producers, as well as for the compensation scheme for the consumption of electricity and natural gas by non-household consumers (69.61 million lei).Other expenditures amounted to 3.25 billion lei, representing mainly scholarships for pupils and students, support for religious denominations, other civil damages and amounts related to payment titles issued by the National Authority for Property Restitution.Expenditures on projects financed from non-reimbursable external funds (including grants from the European Union related to agriculture) amounted to 5.89 billion lei, down by 35.2% compared to the same period of 2024.Investment expenditures, which include capital expenditures, as well as those related to development programs financed from domestic and foreign sources, amounted to 13 billion lei, 23.98% lower than in the same period of the previous year, when they amounted to 17.1 billion lei.The budget for the current year is based on an economic growth of 2.5% and a budget deficit of 7% of GDP.