Thursday, July 9, 2009

Romania budget revenues down 6 pct Y/Y in Jan-June

BUCHAREST, July 8 (Reuters) - Romania reported 67.5 billion lei ($21.8 billion) in budget revenues collected from taxes in the first half of the year, 2 percent less than planned and 6 percent down on the year, the tax authority said on Wednesday.Like most of its neighbours, Romania slipped into recession this year as the world crisis slashed lending and consumption and forced it to secure 20 billion euros in IMF-led aid.

Under the terms of the IMF deal, Romania must enforce vast public sector reforms, but was allowed to keep a budget deficit target of 4.6 percent of gross domestic product this year -- in Romanian accounting standards -- barely smaller than in 2008 and far above EU limits.The IMF deficit target hinges on a forecast of 4 percent economic contraction this year.

Six-month tax receipts, which account for the bulk of consolidated budget revenues, amounted to roughly 13 percent of the government's gross domestic product forecast for this year.Romania recorded a consolidated budget deficit of 2.7 percent of gross domestic product in January-June, meeting the quarterly target agreed under the deal with the IMF.

However, first-quarter data showed a deeper than expected recession at 6.2 percent on the year, raising concerns that a bigger budget shortfall would be unavoidable as the crisis hits tax receipts.The finance ministry said Romania counts on flexibility from the IMF if economic pain worsens.Earlier on Wednesday, Bucharest's representative to the Fund in Washington said the lender will revise downwards its 4 percent forecast of economic contraction in Romania this year. A mission of IMF experts will review Romania's progress in early August.

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