Romania Must Adjust Budget To Economic Crisis – IMF Adviser
Tanasescu said the country’s high current account deficit, which stands at nearly 14% of GDP, volatile inflation and a high budget deficit likely to exceed 3% of GDP in 2008 are Romania’s main vulnerable macroeconomic elements, unlike other highly developed economies.
According to Tanasescu, the most optimistic scenario, under these circumstances, places Romania’s economic growth at 4% of GDP in 2009, which will significantly lower budget revenue.
The official stressed that if this year’s budget revenue reach a maximum 34% of GDP, although the authorities’ estimations indicated 39% of GDP, then, the government must draft a prudent budget in 2009, to cut public spending, and also focus on important economic sectors.
The Romanian government recently revised the state budget, for the third time this year, keeping a budget deficit target of 2.3%, while the country’s general consolidated budget ran a deficit of 1.5% of GDP.
Tanasescu also pointed out that Romania’s banking system is solid and strong, adding, however, that the authorities should find better ways to adjust regulations on various segments of the financial-bank market and the capital market.