Romania’s government tames the budget gap from 1% in Q1 to 0.6% in April on budget revision

Romania’s Cabinet narrowed the public deficit to 0.6 percent in April after 1 percent in the first three months of the year, helped by the recent budget revision and spending cuts, Finance Minister Varujan Vosganian said.

Romania could have exceeded the 3 percent threshold imposed by the European Commission under the Maastricht Treaty and be in danger of facing an excessive budget deficit procedure, had it not succeeded in narrowing down the gap in April. The estimated deficit of 2.73 percent was narrowed to 2.3 percent by cutting out some handouts from the ministries’ budgets. Another wise decision was to endorse an ordinance stipulating trimming spending at some Cabinet offices.

Local authorities were prodded to be more rigorous with their budgets which were better drafted to avoid overrated spending and also ensure constancy throughout the first semester in the health field and consequently prices for medicine, Vosganian today said.

The budget was drafted with 0.14 percent of the gross domestic product surplus in the first four months of the year, the minister recently said, optimistically stressing that at the end of the year it could reach a prognosed level of incomes of 35.9 percent of the GDP.

Incomes stood at 62.15 billion lei and spendings reached 61.5 billion lei, generating surplus of 617 million lei which means 0.14 percent calculated against a 440 billion lei GDP.

Despite positive news over April’s gap, the government has to keep a close eye on the budget to avoid a widening of the deficit over the 2.7 percent target.

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 at the end of February.

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

NewsIn