Budget talks in crisis after IMF asks for a 0.9 pct deficit; negotiations could be halted completely

The International Monetary Fund and the European Commission are allegedly asking the Romanian Government to push for a 0.9 percent of GDP deficit, a demand which the Romanian side finds unacceptable, writes Mediafax.

The local authorities are considering the possibility of ending negotiations if their offer of a 1.4 percent deficit is not accepted.

The international organizations advanced the request for a deficit under 1 percent on Thursday evening, with the argument that there should no longer be any difference between the ESA deficit (calculated based on payment commitments) and the cash deficit (which includes actual expenses).

Prime minister Victor Ponta commented on the situation saying that he doesn’t believe the agreement will be broken over the issue, but the new round of negotiations will be very “tough”. However, his cabinet feels that the 0.9 percent option is unacceptable and a discussion with the European Commission is essential given that “that’s where we have the big problems”.

The differing visions over the deficit were confirmed by Darius Valcov, delegate minister for the budget, in a televised intervention. He reiterated that the government will not accept under any conditions a deficit under 1 percent.

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A new round of negotiations is scheduled to start on Friday, at 3 pm.