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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.
EU: Romania ‘10 Budget Gap May Reach 8% Of GDP Unless More Measures Taken
05 mai 2010, 13:06, English

„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.