Romania’s budget sees 1.2% five-month gap of the GDP on higher spendings

Romania's general consolidated budget has 0.34 percent deficit of the gross domestic product over the first five months of the year while the public budget scored 1.2 percent gap, people from the Finance Ministry told NewsIn.

The 1.2 percent deficit over the first five months represent more than half of the target set for the entire year and the most significant spendings are yet to come.

The public budget narrowed slightly in April to 0.63 percent of the 440 billion lei GDP estimated for this year, from 0.94 percent in the first quarter. In May it widened to 1.2 percent.

On the other hand, the general consolidated budget scored a 0.2 percent surplus over the first four months, but still below the figures announced by Economy and Finance Minister Varujan Vosganian in mid-May. Afterwards it widened to 0.34 percent. Vosganian estimated 0.14 percent surplus for the first four months.

The biggest spendings (25.03 billion lei) were from the public budget, then from the general centralized local budgets (13.55 billion lei) and from the public social insurance budget (10.57 billion lei).

Incomes reached 22.26 billion lei and revenues from tax on profit, salaries, incomes and capital gains hit 11.72 billion lei, 2.7 percent of the GDP.

The balance of payments is to widen to a deficit of 3 percent of the GDP this year and continue to wide to 3.7 percent of the GDP in 2009, according to the European Commission’s spring prognosis. The International Monetary Fund recently warned that the lack of budget predictability affects the equilibrium of the balance of payments.

Last week, the European government adopted a recommendation for Romania urging it to speed up structural reforms, urgently adopt credible medium-term planning and budget for several years and narrow the gap.

Structural reforms along with budget consolidation will help solve difficulties which spring from the risk of economic overheating and contribute to bridge the gap with other EU countries, Joaquin Almunia the Economic and Monetary Affairs Commissioner said.

NewsIn