Romania's budget gap widens to 1.54% in March, on drop in revenues, official says

Thus, the general consolidated budget reported a deficit of 8.2 billion lei (1.92 billion euros) at the end of the first quarter, the equivalent of 1.54 percent of the GDP estimated at 531.25 billion lei for 2009.

The budget deficit planned for the year following the revision stands at 24.3 billion lei, so the public deficit reported after the first three months represents around a third of the gap established for the entire year.

Revenues to the general consolidated budget slipped 6.9 percent in the first quarter on the similar months of 2008, while spendings hiked 15 percent in the similar period, the official said. Budget incomes were 2.6 billion lei smaller than the ones planned at the beginning of the year.

The budget deficit reached 0.63 percent of the GDP after the first two months of the year as total revenues dropped by 6.8 percent and spendings soared 10.1 percent on the similar period of 2008, declared the Finance Minister Gheorghe Pogea at the end of March.

MFP estimates the fiscal balance will improve in April, as the ministry expects larger cash-ins from the tax profit for the first quarter.

The Romanian government okayed yesterday the two emergency ordinances on the budget revision and the system of budgetary bonuses to be sent to the International Monetary Fund (IMF) and the European Commission (EC) so they can transfer the first part of the loan.

The government tries thus to fit in with the budget deficit agreed upon with the IMF of 4.6 percent of the gross domestic product.

After the revision, public expenses were cut by 6.2 billion lei as incomes were reduced by 18.8 billion lei. The initial budget foresaw total public incomes of 193.79 billion lei or 33.5 percent of the GDP and spendings of 205.57 billion lei or 35.5 percent of the GDP.

The government maintained the flat tax of 16 percent and will take into consideration the possibility of not taxing reinvested profits and also reducing the number of taxes.