How realistic is the 2011 budget? Not very, say analysts

The government has, like in previous years, ventured to come up with an optimistic draft budget, forecasting nearly 7% higher budget revenues in 2011 against this year, risking to overestimate the amounts it can raise in taxes.

In addition, there are talks within the ruling party PD-L of cutting the flat rate or social contributions in 2011, which would lead to lower budget revenues unless they are compensated by other measures. And talks with the IMF on next year’s budget are about to begin. The minimum tax has been eliminated, but so far no solution has been agreed to fill the hole.
Under the circumstances, Ionuț Dumitru, head of the Fiscal Council, says an analysis of a draft version that will be subject to significant changes is premature. Anyway, analysts recommend cautiousness when devising the budget and say a 7% revenue increase would be possible only if the economy returned to positive territory, and posted at least 2% growth, which is not at all a certainty.
“We should be cautious as far as the percentage of growth for budgetary revenues is concerned. Otherwise we can end up with an overestimate – we will make the forecast expenditures, but will not achieve the forecast revenues, which will put a lot of pressure on the budget deficit,’ says Lucian Anghel, chief economist of the BCR, the biggest bank on the Romanian market.