Executive aims at 3.7% deficit

Adrian Nastase-led Government is considering to build the budget draft on a 3.7% deficit, sources having attended a meeting between PDSR and PNL told Ziarul Financiar.

The above-quoted sources say that Premier Adrian Nastase complained about the impossibility to target a lower budgetary deficit due to the insufficient budgetary revenues and the ministries’ claims for higher funds. Nastase said that, according to estimates made so far, the budgetary deficit may stand between 3.7 % and 4%, which is a more realistic target.

He specified that the budgetary deficit level may be adjusted depending on negotiations with the IMF, scheduled to continue over the second half of this month.

Nastase added that this year’s budgetary deficit also includes the amounts needed to finance 8 of the 16 special funds.

During his first visit in Bucharest, Neven Mates, the IMF chief negotiator for Romania, insisted that the budgetary deficit should be lowered through a prudent fiscal policy.

As last year’s budgetary deficit was 3.5% of GDP and complied with the stand-by agreement, the IMF is not willing to accept an increase this year, considering that a high budgetary deficit would stand in the way of an inflation cut.

At the beginning of last week, Premier Adrian Nastase stated that the budgetary deficit had not been targeted yet, as the Government planned it at 4% of GDP, while the IMF argued it should be narrowed to 3% of GDP, in order to restrain the inflation rate.

“We intend to boost budget investments and it would be a waste not to use funds granted by the EU because of the budgetary deficit,” said Nastase.

On the other hand, the Premier told the Liberal leaders that many trade union leaders and managers had asked him that the privatisation contracts of the respective companies should be cancelled, but added that their claims were rejected.