Romania's 2010 Budget Deficit Narrows To 6.5% Of GDP

In its financing agreements with the IMF and the European Commission, Romania pledged to keep the budget deficit below RON34.6 billion.

The deficit narrowed from 7.4% of GDP in 2009, due to higher revenue, the ministry said.

Budget revenue amounted to RON168.6 billion in 2010, up 7.2% in nominal terms compared with the previous year. Higher revenue from the sales tax (following a five percentage point increase in July) and the excise duties help offset lower receipts from the personal income and the corporate taxes, according to the finance ministry's data.

The consolidated budget expenditure rose 4.2% on the year in nominal terms, to RON201.9 billion. The largest increases were noted in co-financing of EU-funded projects (+170%), interest expenses (+20% - due to financing past years' deficits) and social aids (+7.3%).

In 2011, Romania committed to cut the budget deficit to 4.4% of GDP.

Joint teams from the IMF and the EU are currently in Bucharest for the final review of a EUR20 billion financial package secured by Romania in May 2009 and for talks on a possible follow-up deal.

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