Romania Likely To Miss 2011 Deficit Target - Ctrl Bker

"2011 will be a very difficult financial year, mostly due to the cyclical evolution of the economy (…) The projection for a deficit of 4.4% of the gross domestic product is based on economic growth. I don't think that it will happen," said Lucian Croitoru, adviser to the central bank governor Mugur Isarescu.

Croitoru added Romania's economy is likely to contract more than estimated in 2010 and the country could miss its budget deficit target for this year as well.

The deficit targets for the next two years are based on severe spending cuts instead of higher revenues from taxes and these measures are bound to face increased social resistance, the central bank's official said.

"Any adjustment will be subject to the nation's approval and the resistance will be increasingly stronger," Croitoru told a central bank seminar.

Moreover, 2012 is an election year and fiscal adjustments will be that much harder to implement, he said.

Romania and the International Monetary Fund agreed on a budget deficit target of 6.8% of GDP in 2010 and of 4.4% of GDP next year.

In 2012, the gap is estimated to narrow to below 3% of GDP.

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