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Romania’s ’09 Budget Def Aim Of 1.7% Of GDP Deemed Relative – Designated Fin Min

Romania's budget deficit will reach, by the end of the year, 4% of the GDP, a level that needs to be significantly reduced in 2009, to 1.7% of the GDP, a somehow relative target, due to global market uncertainties, the designated Finance Minister Gheorghe Pogea said Saturday.
Romania's '09 Budget Def Aim Of 1.7% Of GDP Deemed Relative - Designated Fin Min
20 dec. 2008, 14:20, English

Due to expansionist expenditure policies, Romania will have a very large budget gap, estimated at around 3.67% of the GDP, Pogea said told the Parliament’s Budget-Finance Commission.
 
"But the market seasonality and the natural decrease in some industries, additional to the crisis’ effects, have led to a decrease in revenues. Thus, Romania’s deficit might be at 4% of the GDP," the designated Finance Minister said.
 
Pogea added that for an economy it is not important if a deficit is high or low, but if it is sustainable or not, if it can be financed or not.
 
"This is the greatest danger in 2009 (…) Deficit must decrease from 4% to 1.7%, with a remark: this target is somehow relative, due to uncertainties which are still present in the global economy," Pogea said.
 
He also said that, following the sharp fall in budget revenues in the last two months, the only solution is a drastic cut in spending next year.
 
The outgoing Finance Minister Varujan Vosganian said recently the country’s budget deficit widened to 2.9% of the GDP after the first 11 months, due to a slump in budget revenues in the last two months, following the international crisis.
 
Next year’s budget will be quickly remade, as the current version was adopted before the crisis has stroked Romania’s economy.
 
The outgoing Government adopted end-October the 2009 budget draft, but it has not been yet approved by the Parliament. The current draft aims for a 2% budget deficit target.
 
"We want to make the budget very quickly. We will give more importance to public investments, as in crisis periods the state can support the economy by investing," Pogea said.
 
The designated Finance Minister also said that, besides cutting the budget deficit, keeping the initial deadline of joining the euro zone in January 1, 2014, and the current account gap adjustment are among the Government’s priorities.
 
The budget deficit target for 2009 was revised downwards in the final version of the governing agenda, from 2.5% of the GDP, to 1.7% of the GDP, fueled by spending cuts and canceling "unessential" acquisitions.
 
Thus, the final version of the centre-left coalition’s governing agenda aims for a budget deficit of 1.7% of the GDP in 2009, and a reduction of the current account gap, from 13.5% of the GDP in 2008, to 10.5% of the GDP in 2009.