Tuesday, March 10, 2009

Romania reports Jan budget surplus of 0.3 pct/GDP

BUCHAREST, March 9 (Reuters) - Romania recorded a consolidated budget surplus of 0.3 percent of gross domestic product in the first month of 2009, compared with a surplus of 0.5 percent in January 2008, finance ministry data showed on Monday.

The new centre-left government, which cleared a budget plan for 2009 last month, has pledged to cut this year's budget shortfall sharply to 2 percent of GDP from over 5 percent recorded last year, in an effort praised by the central bank and the International Monetary Fund.

Many economists believe European Union member Romania is next in line to seek EU/IMF help in deals similar to those sought last year by Hungary and Latvia as it struggles to plug its current account deficit and slash the fiscal shortfall.

Investors fear that without sufficient foreign investment and cash floating to Romania's largely foreign-owned banks to finance lending, the country risks running out of money to pay debts and keep the economy functioning.

So far, the two-month-old ruling coalition has pledged to slash spending and the budget deficit, in a reversal of the previous government's loose fiscal policies.

But observers say with presidential and European elections due later this year and a high likelihood that the economy will slow down faster than expected, the temptation to revert to fiscal laxity may damage current plans.

Ministry data showed January revenues were at 15.1 billion lei ($4.46 billion) or 2.6 percent of GDP, while budget spending totalled 13.4 billion lei. In nominal terms, the surplus was 1.6 billion lei.

No comments: