Romania’s budget gap could narrow above estimates to 2.5%, finance minister deems

Romania’s budget deficit could narrow to 2.5 percent of the gross domestic product (GDP), over the 2.6-2.7 percent previous estimate, according to the Economy and Finance Minister Varujan Vosganian.

The reason for this more optimistic estimate stems from applying the European calculation method, different than the one Romania had been using until now.

The revised budget deficit for 2007 stood at 2.6 percent of the preliminary GDP, the minister said last night at a meeting with bankers. The central administration’s deficit was of 1.5-1.6 percent of the GDP, close to estimates revised in November last year, he added.

The minister explained 0.5 percent of the gap on 2007 stand for damages the state-owned Savings Bank will grant to people who had created deposits in the last years of the communist regime before 1989, to buy locally-produced Dacia cars.

Other 0.5 percent of the deficit stand for bonds emissions and credits of local city halls, Vosganian added.

Using European standards in the field, a 2.5 percent budget deficit means 2.7 percent. The minister mulled that from 2010 the budget deficit could stand below 1 percent.

Romania’s target this year is of 2.7 percent of the GDP. However, the European Commission showed the country’s public gap could easily exceed the 3 percent threshold stipulated in the Maastricht Treaty.

Romania’s budget deficit could widen to 3 percent of the GDP this year, threatened mostly by wage inflation, especially in the public system, regional editor of the Oxford Business Group, Paulius Kuncinas, told NewsIn yesterday.

Unicredit analysts estimated the same 3 percent owing to excessive social spending and overestimated incomes to the budget, according to a report.

NewsIn