Romania's Finance Minister Gheorghe Pogea declared today in front of the reunited Parliament that the budget revision was determined by a drop in revenues and estimated that in 2010 Romania will see an advance in its economy once more.
Pogea defended the need for a revision only two months after the 2009 budget was approved by arguing that the economic crisis triggered unpredictable and quick changes.
The budget drawn up by the government for this year planned to avoid the budget gap widening to 9 percent of the gross domestic product (GDP), said Pogea. The minister added that the anticrisis program was 90 percent completed and that the budget revision will not affect the public investment level. Moreover, the accord with the International Monetary Fund (IMF) and the European Commission provides a cheaper financing than before.
The finance minister also defended the need for introducing the poll tax, by referring to the need for an equal treatment for all taxpayers and to the necessity to hike the weight of budget revenues. Pogea stressed that Romania has the lowest level of revenues to the state budget, of only 32.8 percent of the GDP, compared to 40 percent in Bulgaria for instance.
The budget deficit was raised from 2 percent to 4.6 percent of the GDP following the budget revision as incomes to the public budget represent 32.9 percent of the GDP and expenses 37.5 percent, said Pogea.
The GDP for 2009 was changed downwards from 579 billion lei to 531.25 billion lei. The government is currently taking into consideration a 4 percent decrease of the economy versus a 2.5 percent increase in the budget voted by the Parliament.
Pogea declared the total incomes stand at 174.9 billion lei this year, with 18 billion lei less than in the initial budget and total spendings amount to 199.3 billion lei. The budget gap will widen to 24.3 billion lei (4.6 percent of the GDP), Pogea also mentioned.
The budget for 2009 approved by the Parliament foresaw total incomes of 193.79 billion lei (33.5 percent of the GDP) and spendings of 205.57 billion lei (35.5 percent of the GDP). The GDP was then estimated at 579 billion lei.
The government estimates a 3.7 percent gap for 2010 and below 3 percent in 2011.
Pogea said spendings with investments represent 19-20 percent of the budgetary expenses or 7 percent of the GDP, meaning 38 billion lei.
Romania clinched a deal with the IMF, the EC, the World Bank and other financial institutions over a 20 billion external loan to help restart engines behind the economy.
However, both the IMF and the EC condition granting the money by adopting certain fiscal and salary policies, after the budget deficit widened above 5 percent of the gross domestic product last year.
The first installment of the loan, worth 5 billion euros, could enter Romania by May 15.