UPDATE Romania's end-2019 budget deficit at 4.6 pct of GDP

Romania closed 2019 with a budget deficit of 4.6 percent of GDP, above the authorities' November estimation, when the second budget adjustment was operated, Finance Minister Florin Citu announced on Tuesday. The only time with a wider budget gap was the crisis year of 2010, when the government ran a deficit of 6.5 percent of GDP. In 2018 the budget deficit was 2.88 percent of GDP. "We ended last year with a budget deficit of 4.6 percent, slightly higher than our estimate at the November adjustment," Citu said in a conference at the Finance Ministry headquarters. According to the Finance Minister, the reasons that caused the deficit to overshooot by 0.2 percentage points the 4.4 pct of GDP target set at the latest budget adjustment were revenues from additional dividends from national corporations by 1.3 billion lei lower, the disbursement of 0.91 billion lei in compensations to brothers Viorel and Ioan Micula due under arbitration decision ARB/05/20, and 1.3 bln lei worth of additional capital and operating expenses at the administrative-territorial units in December. Citu mentioned that certain companies report dividends on paper, but things turn out otherwise when they are to be collected. In this context, the FinMin said that he will order a financial control at all state-run companies, mentioning power producer Hidroelectrica as an example. "The bill that cleared Parliament provided for revenues of 33.5 pct of GDP and expenses of 36.3 pct. The budget execution ended up in line with what has happened with revenues in Romania in recent years, they were 30.9 pct of the GDP, there was no surprise there, but the expenses stayed put. It's exactly what I have been telling you from the very beginning of my term, that the 2019 budget revenues have been overestimated in order to artificially diminish the budget deficit at the beginning of the year. This was known from the beginning of the year, and we also presented internal documents that showed that the budget deficit will be around 4 pct or over 4 pct in 2019," Citu said. According to the Finance Minister, the tax revenues fell short of the initial estimates because of - among others - issues arisen over EU funds, while expenditures with the personnel, social assistance, goods and services were higher, and investment expenses were massively watered down. "Throughout the year money was taken from investments. There were no budget savings. The money was directed toward expenses with salaries and social assistance," said Florin Citu. He mentioned that this year's budget is built on a conservative model that realistically takes into account the structure of the economy. "I've shown you that during the year money was taken from investments and directed towards wage and social assistance expenses. In November we reversed this trend. In November we footed the outstanding bills and spent the money for investments, which can be clearly seen in the 6.4 billion lei spent for investments that month and the 10.4 billion lei in December," he said, cautioning that the state is in no position to require voluntary compliance if it doesn't pay the bills to the companies. AGERPRES (RO - author: George Banciulea, editor: Andreea Marinescu; EN - author: Simona Klodnischi, editor: Simona Iacob)

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