Field: Finances and financial capital

Subfield: Finances

Details:

The way the state allocates its resources (how public authorities establish priorities in spending public money) and the way the state follows how these resources are spent (compared to their initial allocation) significantly influence the level and dynamics of public expenditures. The total public expenditures show in fact the state’s presence/ importance in economy, but also the dependence of economic activity on the state’s intervention. Among public expenditures, of crucial importance are expenditures that cannot be decreased during recession and are significant in the calculation of structural deficit (wages, pensions). A separate category of public expenditures is represented by investments and public acquisitions of materials (supplies). Another significant category of expenditures is represented by the expenditures on state-owned enterprises. The level of public expenditures crucially depends on the level of public revenues: a low level of collection leads to a low level of redistribution, within the limits imposed by deficit and public debt. Romania has the lowest public expenditure (% of GDP) in the region and the EU (34.7% in 2015, compared to 41.5% - Poland or 47.5% - Hungary), mostly owing to the low level of public revenues.