Romanian Government gets green light for 1.83 percent deficit

The Romanian government and its international backers, IMF and the European Commission, have agreed on a 1.83 percent deficit for next year’s budget, up from 1.4 percent, with the understanding of a 0.4 percent share of the budget for cofinancing EU projects, PM Victor Ponta announced on Tuesday.

“Practically, we will have a RON 283 billion total budget, out of which 225 for revenues and 13 billion for the 1.83 percent deficit. Likewise, our international partners accepted the economic forecast of a growth similar to the one in 2014, meaning 2.5 percent of GDP. For cofinanced European projects we have set aside (…) supplementary financing of RON 19 billion from the state budget and RON 9 billion for local authorities”, Ponta announced at the end of negotiations on Tuesday.

The PM highlighted the fact that IMF and the European Commission signed off on all the figures, including the 1.83 percent deficit.

“We’ve previously clearly stated that if, in the first semester of 2014, this tendency towards economic growth, towards budget revenues increasing and maintaining deficit target keeps up, which I believe will happen based on information from the last two years and a half, then we can examine, in the future discussions, now measures for fiscal relaxations, especially VAT cuts for food products”, Ponta added.

In the previous week, the budget talks were allegedly going badly after IMF and the EC asked for a 0.9 percent deficit, a figure which the government found unacceptable, according to PM Victor Ponta and the delegate minister for the budget, Darius Valcov. On Monday, sources close to the negotiations announced to the media that the international backers are ready to accept the 1.4 percent deficit.

before the negotiations started, official sources stated for Mediafax that the Government will ask for a 2 – 2.1 percent deficit, which would allow the executive to cover up holes in the budget resulted from this year’s fiscal measures.