BUCHAREST, Romania: The Romanian finance minister on Wednesday said the country's proposed 2008 budget foresees a 2.7 percent deficit, with a 43 percent pension hike estimated to cost as much as €6 billion (US$8.3 billion).
Economic growth, estimated to hover at about 6 percent for the next few years, will help support the additional spending, and the government does not plan to raise taxes, Economy and Finance Minister Varujan Vosganian said.
The government also plans a 6 percent cut in payroll taxes.
However, as the average pension increases from 396 lei (US$180, €130) to 568 lei (US$260, €190), the government will need to overspend again in 2008, Vosganian said.
Gross domestic product is estimated to be 438 billion lei (€146 billion; US$202 billion), with the budget deficit estimated to reach 11.9 billion lei (€3.9 billion; US$5.4 billion) — about 2.7 percent of GDP.
The European Union, which Romania joined in January, and the International Monetary Fund have asked the government to tighten public spending and to reduce the budget deficit, which is expected to reach 2.8 percent this year.
In 2008, Romania also plans to spend more on education and health care, two sectors which have been underfunded for years, the finance minister said.