EU: Romania ‘10 Budget Gap May Reach 8% Of GDP Unless More Measures Taken

Romania’s planned budgetary measures may not be sufficient to achieve this year’s deficit target of 6.4% of the gross domestic product and, without additional measures, the gap could reach 8% of GDP by year-end, the European Commission said in its spring forecast Wednesday.

3 views

"Without further measures, the 2010 general government deficit could reach 8% of GDP," the report noted. It said the Romanian authorities are expected to commit to additional compensation measures to reduce the budget deficit during the Commission's mission to Bucharest.

A joint mission of the International Monetary Fund and the Commission arrived in Bucharest April 27 for the fourth review of Romania's progress under a EUR20 billion bailout package signed last spring.

The European Commission uses the ESA95 methodology to calculate a country's budget deficit. Usually, the Commission's figures exceed by some 0.5% of GDP the data computed using the "cash" methodology Romania and the IMF use as reference.

Romania and the IMF agreed to a budget deficit target of 5.9% of GDP in 2010. By ESA95 standards, the target reaches 6.4% of GDP.

Romanian Finance Minister Sebastian Vladescu said the IMF urged for measures to reduce spending and increase budget revenue, including by hiking a series of taxes, people familiar with the matter said earlier Wednesday.

Vladescu said the budget gap will exceed 5.9% of GDP in 2010, adding the IMF could allow a higher deficit of up to 6.3%-6.4% of GDP, the mentioned sources said.

If you liked this story, please follow MEDIAFAX.RO on FACEBOOK »

The content of mediafax.ro is for your information only. Republishing or using this content is forbidden without express consent of MEDIAFAX. For this consent, please ask for it by mail at vanzari@mediafax.ro.