Romania should look on a long-term perspective when drafting its fiscal policy, IMF says

Romania’s fiscal policy should be drafted on the long term and not from one day to another, according to International Monetary Fund (IMF) representatives, who emphasize the estimates for this year’s budget revenues are optimistic.

Romania should focus on the 2009 budget instead of the one for 2008, IMF representative for Romania and Bulgaria, Albert Jaeger said.

The official believes the government’s forecast concerning this year’s budget revenues could beat by 1-1.5% of the GDP the level estimated by IMF.

Budget estimates refer to revenues of 39.3 percent of the GDP. In 2007, the sums collected to the budget were the equivalent of approximately 32 percent of the GDP.

IMF deems the government should aim at a budget deficit below 2 percent of the GDP in 2008. The budget law targets a 2.7 percent of the GDP budget deficit for this year and the government pledged to cut expenditures in order to narrow the deficit.

Economy and Finance Minister Varujan Vosganian earlier this month said the budget registered a surplus of 0.1-0.2 percent of the GDP in the first three months of the year.

On March 5, the government approved the first public budget rectification amounting to 1.1 billion euros. The Cabinet cut spending concerning the endowment of some public institutions and lowered the budgets of some ministries.

Yet, analysts voiced skepticism regarding the government’s plans and said revenues are overrated within the budget and expenditures cannot be reduced very much within an election year.

Budget revenues upped 51.1 percent year-on-year in the first quarter, to 37.05 billion lei (10 billion euros). These account for 7.8 percent of Romania’s 2008 GDP, estimated at 475 billion lei.

NewsIn