Consolidated budget deficit 2.4 pct of GDP in 2007

In 2007 the consolidated budget deficit was 9.991 billion lei, accounting for 2.4 percent of the Gross Domestic Product (GDP), Minister of Economy and Finance Varujan Vosganian told a press conference on Monday.

The cited official said that calculated according to European statistics, the 2007 budget deficit was 2.6 - 2.7 percent of the GDP, with revenues standing at 136.8 billion lei - that is 35 percent of the GDP - and expenditures amounting to 146.8 billion lei, that is 37.6 percent of the GDP respectively. According to the Finance Minister, the difference between the Romanian and European accounting procedures is given by non-reimbursable funds and particular loans engaged by the local authorities.

Vosganian added that in Q4 2007 expenditures by local governments represented some 50 percent of the all-year outlays figure and the Ministry has no control over these expenditures.

The Minister explained that last year's large deficit is due to pressure exerted from various directions on the budget, starting with the drought that hit Romania and going through the country's freshly acquiring EU membership and continuing with the laws adopted by Parliament that came in force over the year without the corresponding amounts earmarked under the draft budget.

'The VAT-free customs clearance for products coming from non-EU countries curtailed the GDP by 0.35 percent, that is 424 million euro. The government's decision to increase the pension point ahead of schedule also triggered extra outlays of 300 million euro and the grant of subsidies resulted in additional outlays of 600 million euro. The 25 percent raise of military personnel wages brought another 80 million euro in expenses and loans engaged by the local governments put an extra burden of 0.5 percent on the GDP,' said Vosganian.

The initial target of the 2007 budget deficit was 2.7 percent of the GDP and was subsequently reduced to 2.4 percent of the GDP.

Rompres