New Govt Plan To Lead To 6% Of GDP Budget Def In '09 - Romania's Fin MinPublish date: 17-12-2008
The fiscal incentives in the new Romanian governing plan draft, the VAT cut, supplementary allowances for health, education and minimum pensions will lead to a budget deficit of 6% of the GDP in 2009, Romania's finance minister Varujan Vosganian said Tuesday.
Vosganian also said the government plan draft does not reflect the current Romanian context as the country is affected by the global economic crisis.
The 2009-2012 governmnt program was set by the centrist Liberal Democrats and the left Social Democrats, the two parties that agreed Sunday to form a coalition government, following Romania's November 30 general election. The governing plan is to be adopted by Friday, the designated Prime Minister Emil Boc said Tuesday.
According to the draft, Romania's GDP will grow by 3.5% in 2009, after an 8.5% growth in 2008, while the budget deficit is seen at 2.5% of the GDP in 2009, from 3.5% of the GDP estimated for 2008. Romania's new government plans to lower the 19% value added tax to 5% for basic food products and increase it to 25% for luxury items. It also plans to allocate 6% of the GDP both for education and the healthcare system.
The finance minister said the main representatives of the two political parties should have asked for more information from the Finance Ministry to see that the budget revenues decreased by nearly EUR2 billion in the last three months, their biggest decline ever.
Vosganian added that the budget revenues in the budget for 2009 should be adjusted by at least EUR3 billion.
Two weeks ago, Vosganian said the country's budget deficit widened to 2.9% of the GDP after the first 11 months, due to a slump in budget revenues in the last two months, following the international crisis. He said the budget revenues in October and November were EUR1.3 billion below the projected level.
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