BUCHAREST, Jan 7 (Reuters) - Romania's government sees the budget deficit falling to 1.7-2 percent of gross domestic product this year from an estimated 5 percent in 2008, the finance ministry said on Wednesday.
'Macroeconomic assumptions indicate an economic growth of 3.5 percent ... and a consolidated budget deficit of 1.7-2 percent of GDP,' the ministry said in a statement.
The statement followed a meeting between Finance Minister Gheorghe Pogea and Central Bank Governor Mugur Isarescu on Tuesday, on this year's macroeconomic projections.
Economists say spending cuts are crucial to keep Romania's economy on an even keel and reassure jittery markets, but the cabinet may struggle to introduce effective measures to keep the fiscal deficit under the EU ceiling of 3 percent of GDP.
The government inherits a bloated budget from the former cabinet of Calin Tariceanu, blamed by critics for failing to save up for tougher times by spending freely on welfare and salaries.
Pogea, yet to draft a 2009 budget bill, said late last year he planned to cut this year's budget gap to 1.7 percent of GDP, by drastically reducing spending on public administration and rationalise welfare to boost confidence in the economy.
The ministry listed as main priorities, adjusting the budget deficit by cutting current spending and redirecting funds to investment projects, implementing anti-crisis measures to ensure macroeconomic stability and prepare the way to euro adoption.
It said this year's economic growth was estimated at 588 billion lei ($195.7 billion).