ING Says Romania May Reach 2010 Deficit Target, Sees Limited Mkt Impact

Recent budgetary indicators suggest Romania may be able to reach its year-end fiscal objectives, but the positive evolution could have only a limited impact on the market, due to the government’s repeated failure to lower the general arrears, according to a report from ING Bank Romania.

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The bank said investors were broadly unmoved by official data on the budget development, despite obvious progresses, because the government has relied on general arrears in the past to support budgetary evolution.

"This situation suggests that even new progresses may have a limited impact on the bonds segment," ING said.

It said the positive trend in the public revenue and expenditure sectors recorded in the first nine months of 2010 could revert in the last months of the year and the government could miss its fiscal targets.

ING said the government's estimations on fourth quarter revenues and expenditure are overrated.

However, if the budgetary indicators maintain their recent trend, Romania is likely to achieve its budget deficit target of 6.8% of the gross domestic product, the report noted.

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