Tuesday, December 29, 2009

Romania 11-month budget deficit at 6 pct/GDP

BUCHAREST, Dec 28 (Reuters) - Romania's consolidated budget deficit jumped to 6 percent of gross domestic product in the first 11 months of the year, from 5.1 percent in January-October, finance ministry data showed on Monday. 

Under Romania's 20 billion euro aid package from the International Monetary Fund and other lenders, the European Union state targets a deficit of 7.3 percent of gross domestic product (GDP) in December.

Romanian budget spending tends to soar in the last two months of the year, particularly at the level of local administrations, a risk magnified in 2009 by a two-round presidential election that ended on Dec. 6.

But the IMF, which put Romania's 20 billion euro aid package on hold pending the approval of a cost-cutting 2010 budget bill, said earlier this month it expected Bucharest to meet this year's shortfall target due to last-minute spending cuts.

Among harsh measures Romania took to cut spending this year are freezing state wages and furloughing 1.3 million public workers for 8 to 10 days.

The budget for 2010 is expected to be more austere, aiming to lower the fiscal gap to 5.9 percent of GDP. It envisages up to 100,000 public sector job cuts and a freeze on pension and wages.

The IMF has said it would return in January once a budget has been approved by parliament and was optimistic Romania could receive its next loan tranches in February.
Together with aid from the European Commission, they could amount to up to 3.3 billion euros.

In nominal terms, the deficit reached 29.8 billion lei ($10.3 billion). January-November revenues were 143.4 billion lei, or 28.8 percent of GDP, while spending reached 173.1 billion lei.

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