Wednesday, July 16, 2008

Romania to hike infrastructure spending in budget revision

BUCHAREST, July 15 (Reuters) - Romania's government will hike infrastructure spending in a budget revision due on Wednesday, but will not change the deficit ceiling target for 2008 thanks to better nominal gross domestic product forecasts.

"Our top priority is modernising rail and road infrastructure," Finance Minister Varujan Vosganian told private business television Money Channel in an interview. He said around 2 billion lei will be allotted to that sectors.

The national forecast commission revised upwards this year's GDP to 475 billion lei late in May.
Vosganian said the 2.3 percent of GDP budget shortfall goal will remain unaffected by the revision and that his ministry will fight mounting pressures for inflationary spending rises such as wage demands from trade unions.

Experts say that this gap level, if accomplished, would amount to around 2.5 percent of GDP according to Brussels calculations, below the Maastricht ceiling of 3 percent.

Trade unionists have asked for a rise in the minimum wage to 540 lei from July 1 from 500 lei at present and warned that mass protests are on the cards if demands are not met.

The official said preliminary data indicated a consolidated government budget shortfall of around 1 percent of GDP at the end of June.

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