Page 18 - Economic Outlook Romania 2019

Medium-term fiscal outlook: a ticking bomb

Largest VAT gap in Europe Second lowest fiscal Lack of automatic stabilizers

revenues as share of GDP leads to discretionary policy

40 50 0.7 Semi-elasticity of the budget
VAT gap (%) Fiscal revenues (%/GDP, 2017) balance to the output gap
35 35.9 0.6
45 Wage envelope / Fiscal revenues
0.50
30
40.1 0.5
40
25
0.4
0.34
20 35
(EU average ~ 12%) 0.3
15
30 0.2
10 25.4
25 0.1
5
0
0 20 NL DK BE FR SE UK AT FI DE ES IT IE CY PL PT HU EL SI HR MT EE LU CZ LT SK LV RO BG
RO GR IT SK LT PL CZ BG HU FR UK LV IE PT BE DE DK SI FI AT EE NL MT ES HR SE LU FR BE DK SE FI AT IT EL DE EU NL HU LU HR PT SI UK EE CZ ES PL MT SK CY LV BG LT RO IE EU28

Untacked tax evasion Improving tax collection… Limited room..
Low compliance rate, arrears ...remains illusive without The budgetary semi-elasticity

from SOEs, WB program for structural reforms and indicates by how much the
ANAF declared off-track, upgrade of the IT system. budget balance changes as a

large share of self- ratio to GDP when the output
consumption in GDP. gap increases by 1ppt.

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