Romania's budget deficit reaches 1.7 percent in 2006

BUCHAREST, Romania: Romania's budget deficit reached 1.7 percent of gross domestic product in 2006, but was lower that the government's planned deficit of 2.5 percent, the Finance Ministry said Thursday.

The increase, from 0.8 percent in 2005, was mainly due to higher spending in December, when expenditures accounted for 18.1 percent of the total expenses made throughout the year. In December, the budget had a surplus of 1.2 percent.

Romania, which joined the European Union on Jan. 1, had forecast a budget deficit of 2.8 percent of GDP for 2007.

The government estimates that GDP rose by about 8 percent in 2006, and expects the economy will continue to grow strongly in 2007 at over 6 percent, with an annual inflation of 4.5 percent.

The International Monetary Fund has urged the government to balance the budget to keep a growing current account deficit under control. But the government rejected the proposal, saying it needed to spend heavily on infrastructure improvements and education.

Romania is contributing €1.1 billion (US$1.42 billion) in 2007 to the EU budget and also plans to spend heavily on education, public health and developing its transport infrastructure.

The country hopes to receive €2.26 billion (US$2.93 billion) from the EU this year, but the aid depends on which projects the bloc approves for financing.

iht.com