Romania steps into 2009 with a budget gap wandering away to 5% of the GDP, president says

Romania began the year with a budget deficit above 5 percent of the gross domestic product (GDP) which pushes the economy in a dark corner, while the budget is not a sack without end, President Traian Basescu said yesterday.

The president showed Romania counts about 5 million active employees, of which 1.5 million publicy-paid employees and 4.9 million retired people, besides the ones to receive agriculture pensions.

Prime Minister Emil Boc said on December 30 the budget deficit stands close to 5 percent of the GDP and the incomes to the public budget are 7 billion euros smaller compared to estimates which paved the pay to some unpaid bills of hundreds of million euros for infrastructure works.

The former Economy Minister Varujan Vosganian declared at the beginning of last month the budget gap could widen to 3-4 percent of the GDP in 2008, depending on the revenues to the public budget registered in November and December.

The former minister had previously declared revenues to the state budget lowered by 2 billion euros in the last three months of 2008 versus the same period of the past years. He also mentioned the incomes could lose 3 billion euros in 2009 if the trend continues.

The government targeted a 2.3 percent budget gap in 2008, calculated according to Romanian standards, which could be slightly above the one calculated with European standards.

In 2007, Romania recorded a general consolidated budget of 2.3 percent of the GDP after the country's standards and of 2.7 percent according to the European ones.

Budget incomes below target last year

The last estimate of the Finance Ministry reveals that incomes to the budget, including the extra budgetary ones stood at 31.6 percent of the gross domestic product (GDP), below the 36 percent target, according to minister Gheorghe Pogea.

The consolidated budget deficit widened to 4.5 percent of the GDP by the Romanian standards, but reached 5.21 percent of the GDP after the European standards.

The 2008 budget approved by the Parliament included incomes of 39.3 percent of the GDP and a budget deficit of 2.7 percent. Last year, analysts warned that the budgetary incomes are overrated.

After several revisions, the previous Cabinet revised the budget gap target to 2.3 percent of the GDP and lowered income estimates as well.

NewsIn