IMF sets first-quarter deficit target at 8.25 billion lei

The International Monetary Fund (IMF) has already agreed on two quarterly budget gap targets for Romania, in a broad effort to contain the 2010 deficit within the 5.9% target range, from 7.2% in 2009.
The global lender set a national debt target for the first quarter at 8.25 billion lei (around €2 billion), and 15.54 billion lei (€3.8 billion) for the first half. With the current macroeconomic projections in place, the deficit would reach 21.8 billion lei in September and 31.9 billion lei at year-end.

Should the country overshoots the deficit target set by the IMF by 200 million lei, the Ministry of Finance will meet the IMF representatives to review the technical details specified in the technical memorandum of understanding attached to the letter of intent signed by the minister of finance and the governor of the National Bank of Romania.

IMF has also agreed on quarterly general government current primary expenditures caps: 32.9 billion lei in the first quarter and 65.1 billion for end-June. After the first nine months, primary expenditures should not exceed 97.5 billion lei or 131.3 billion lei at year-end.Non-grant revenues to state budget are estimated at 37.8 billion lei in the first quarter, 77.6 billion lei in the first half, 119.5 billion lei at end September and 161.8 billion for end-year.

As for the general government guarantees to the private or state-run companies, the International Monetary Fund put on a cap of 12 billion lei for this year. The ceiling includes the end-December limit of 2.1 billion lei, raising the ceiling on the issuance of government guarantees to 9.9 billion lei, with no quarterly limits.

Last year, the government could have issued state guarantees of up to 7.7 billion lei, but used less than a third. Therefore, this year ceiling could be adjusted upward by 4.3 billion lei.
The projections are based on the macroeconomic forecasts agreed with IMF which indicate a 1.3% economic growth this year, against the severe contraction of 7.2% last year, according to the preliminary data from the National Institute of Statistics.