Tuesday, April 14, 2009

-Romania Q1 budget deficit widens to 1.56 pct/GDP

BUCHAREST, April 14 (Reuters) - Romania's consolidated government budgetdeficit widened to 1.56 percent of gross domestic product in the first quarter, Finance Minister Gheorghe Pogea said, as world crisis hit the emerging economy. 

The fiscal deficit was 0.6 percent in January-February. 

'In the first three month of 2009 the general consolidated budget deficit represents 1.56 percent of the GDP. In nominal terms, about 8.29 billion lei. This is preliminary data,' Pogea told a news conference on Tuesday. 

'Lower industrial output ... a drop in companies' turnover was the main cause for the reduction in revenue (collection).' 

Pogea said revenues fell by 6.2 percent on the year in January-March while spending rose 14.2 percent. He listed revenues from the profit and value-added taxes among the main ones that recorded falls. 

'Revenues from the VAT have fallen because of shrinking consumption and this best reflects a situation of crisis we are mired in,' Pogea said, adding that spending grew chiefly because of higher borrowing costs for domestic government debt. 

Romania has switched from being the European Union's fastest-rising economy to one of its most vulnerable in just a few months, as its dependence on evaporating foreign cash exposes it to a potential financing crisis. 

Last month, Romania agreed on a 20 billion euro loan package led by theInternational Monetary Fund, to plug its funding needs and calm jittery markets. 

While the money is conditional on a broad package of fiscal reforms, the IMF has allowed the centre-left government to target a deficit of 4.6 percent of GDP this year, under Romanian accounting standards -- 5.1 percent under EU methodology. 

Pogea said Romania is expected to post a 7.5 percent of GDP current account deficit at the end of 2009. 

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