In 2023, Romania allocated around 30% of its revenue to cover budgetary salaries, a figure that remained relatively stagnant compared to previous years. While this spending level places Romania among the top three EU countries in terms of salary-to-revenue ratio, it is important to note that the overall budget deficit has also increased.
Budgetary salaries in Romania accounted for 29.94% of total revenue in 2023.
The EU average for budgetary salary-to-revenue ratio was 21.81%.
Romania's budget revenue stood at 33.6% of GDP, compared to the EU average of 45.9%.
The European Commission projected a 6.6% ESA budget deficit for Romania in 2023, higher than the government's anticipated 5.9% deficit.
Romania's Budgetary Landscape
Despite a slight decrease in 2022, Romania's budgetary salary expenditures have remained consistently high in recent years. In 2020, these expenses peaked at 37.44% of revenue. However, the following year saw a significant drop to 29.83%, followed by a period of stagnation in 2023.
This trend can be attributed to several factors, including:
Salary increases granted in 2023: In response to public protests, the Romanian government approved salary hikes for public sector employees in 2023. However, these increases were not accompanied by a corresponding rise in revenue collection.
Low revenue collection: Romania consistently ranks among the lowest EU countries in terms of budget revenue as a percentage of GDP. This puts a strain on the government's ability to meet its financial obligations, including salary payments.
Comparison with EU Members
While Romania's budgetary salary-to-revenue ratio is relatively high, it is important to consider the country's overall economic context. When compared to GDP, Romania's budgetary salary expenditures are in line with the EU average.
However, Romania's low revenue collection rate remains a cause for concern. The country's ability to maintain its current level of budgetary spending without further widening its deficit will depend on its ability to improve tax collection and fiscal discipline.
Outlook for 2024
The European Commission's projected 6.6% ESA budget deficit for Romania in 2023 highlights the need for the government to address its fiscal imbalances. Implementing measures to enhance revenue collection and exercise stricter spending controls will be crucial for ensuring long-term fiscal sustainability.
Source: Info Financiar
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