Tuesday, February 16, 2010

Romania '09 Budget Gap At 7.2% Of GDP, Below IMF Cap

BUCHAREST -(Dow Jones)- Romania's consolidated budget deficit rose to 36.4 billion lei ($12 billion), or 7.2% of the gross domestic product, at the end of 2009, modestly below the 7.3% of GDP cap agreed to with the International Monetary Fund, the Finance Ministry said Monday, news agency Mediafax reports.

Overall revenue to the budget declined 5.4% on the year to RON156.6 billion in 2009, mainly due to lower revenue from the value-added tax, corporate profit taxes and customs duties. On the other hand, the total expenditure rose 1.4% to RON193 billion.

By sector, personnel spending increased 2.4% last year, mostly due to salary increases approved in the second half of 2008, the ministry said.

It said social assistance costs rose RON9.8 billion in 2009, following an increase of the pension point and the introduction of the minimum social pension as of April last year.

"In order to cushion the impact of the economic and financial crisis on vulnerable social categories, the government adopted a series of sheltering measures for low-income population," the ministry said.

On the other hand, the costs with goods and services in the public sector dropped 12.6% on the year in 2009, following a series of government measures in the sector, it said.

Romania and the IMF agreed on a government deficit target of 5.9% of GDP in 2010.

Last week, the European Commission recommended Romania be given until 2012 to bring its budget deficit down to 3% of the gross domestic product, in light of the country's "effective" corrective measures taken so far. The deadline extension is discussed during this week's Ecofin meeting.

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