Monday, January 4, 2010

Romanian Budget Gap Widens to 6% of GDP as Revenue Declines

By Adam Brown

Dec. 31 (Bloomberg) -- Romania’s year-to-date budget deficit widened to 6 percent of gross domestic product in November as expenditure rose and revenue dropped.

The gap, which widened from 5.2 percent of GDP in October, means the government is on track to meet its year-end target, the Finance Ministry said on its Web site today.

Romania has agreed to limit its budget deficit to 7.3 percent of GDP this year to meet conditions of a $30 billion bailout loan led by the International Monetary Fund. The agreement also limits the 2010 budget deficit to a maximum of 5.9 percent.

In the first 11 months of the year, state revenue fell 6 percent, led by a drop in the collection of taxes on corporate profits, value added taxes and customs taxes because of the recession, the ministry said.

At the same time, expenses rose 2.9 percent on the year as pension obligations drove up payments by 20 percent and costs to maintain the civil service increased 4.7 percent, it said.

To contact the reporter on this story: Adam Brown in Bucharest atabrown23@bloomberg.net

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