Monday, October 19, 2009

Romania Will Meet This Year’s Budget Gap Target, Popa Says

By Elizabeth Konstantinova

Oct. 16 (Bloomberg) -- Romania will meet this year’s budget deficit target agreed with the International Monetary Fund as part of a bailout package, Deputy central bank Governor Cristian Popa said.

“The figures look promising, because the nine-month data of budget execution are below the targets” set by the IMF and the European Union, Popa said in an interview in Athens today. “I’m hoping the annual figures will come out as planned in the multilateral financing program.”

Romania, the EU’s second-poorest member, is relying on a 20 billion-euro ($29.8 billion) bailout to cover its budget and current-account gaps. The Balkan country is working to cut spending to meet a deficit target of 7.3 percent of gross domestic product this year, as part of the agreement.

An IMF team will visit the country once a new Cabinet is formed. PresidentTraian Basescu nominated economist Lucian Croitoru as prime minister to confront the recession and push through the bailout program after Emil Boc’s government collapsed.

Croitoru must form a Cabinet and draw up a program in the next 10 days. His nomination needs ratification in Parliament before the end of the month.

Spending-cut measures to be taken by the new government will include sending all state workers on 10 days’ unpaid leave and firing some employees next year.

“We need to consolidate the positive things of bottoming out, to slow down negative growth,” Popa said. “Our forecast is for small positive growth, while we keep inflation on the downward path consistent with the targets.”

The government expects economic growth of between 0.5 percent and about 1 percent in 2010, as the economies of trading partners improve and domestic investment and consumption picks up, Popa said.

To contact the reporter on this story: Elizabeth Konstantinova in Athens atekonstantino@bloomberg.net

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