Wednesday, November 5, 2008

Romania revenues up but firms struggle with tax in Oct

BUCHAREST, Nov 4 (Reuters) - Romania's budget revenues rose in the first 10 months of the year but the government lost out on 1.5 billion lei ($526 million) in October as companies struggled to find funds needed to pay their taxes, the finance minister said on Tuesday. "We have encountered difficulties since mid-October in collecting revenues for the state budget," Varujan Vosganian told a financial seminar. "Banks are reducing funding lines ... this has cost us 1.5 billion lei in October."

Ministry data showed on Tuesday that Romania's budget revenues rose by 29.3 percent on the year to 128.1 billion lei in January-October.

Since the global credit crunch intensified in recent months, concern has grown that Romania is more vulnerable to an economic downturn than some of its peers because of a vast external shortfall, high rates of hard currency borrowing and inadequate fiscal and wage policies.
The fear is the that Romanian economy could be destabilised if global cash flows and foreign investment dry up and are no longer sufficient to plug the double-digit external deficit.
Revenues, which stem from the consolidated budget's five main components, amounted to roughly 25.4 percent of the latest gross domestic product (GDP) government forecast for this year.

They are unconsolidated and account for about 92 percent of overall budget revenues.
The European Union member's centrist minority government targets total revenues at 36.2 percent of GDP in 2008, including the absorption of some 2 billion euros worth of EU funds.
Romania, which has revised its budget three times this year, targets a consolidated shortfall of 2.3 percent of GDP, or 11.7 billion lei.

However, economists and international observers are concerned about loose fiscal policies at a time when union pay pressures are mounting ahead of a parliamentary vote on Nov. 30.
Vosganian also said the centrist minority cabinet will need funding of 5-7 billion lei to plug the gap by the end of the year, but that he was not concerned about securing it.

No comments: