ECONOMY

Romania’s finance minister says country will trim budget deficits

BUCHAREST (Reuters) – Romania said Friday it will trim its budget deficit caps for this year and 2006 to rein in its ballooning current account gap, but analysts said the move was unlikely to prevent its further deepening. Finance Minister Ionut Popescu said the European Union candidate would cut its 2005 budget deficit to 0.7-0.75 percent of gross domestic product (GDP), after reaching a deal with the IMF on its two-year standby accord. «Romania would need tight budgets as long as there is a concern related to its higher current account deficit,» Popescu told reporters. He said the budget review was likely to be approved by the Cabinet next week. Romania, which had a budget gap of 1.2 percent of GDP last year originally foresaw a shortfall of 1.5 percent for 2005. But the IMF warned it needs a tighter budget to counter possible revenue shortfall following sweeping tax cuts in January. Popescu said the government wanted to bring the deficit below 0.5 percent of GDP next year as state subsidies were poised to decrease, mainly in the inefficient mining sector which is undergoing IMF-prescribed restructuring. «Around 7,000 miners will be laid off by the end of 2005 so next year there will be less subsidies,» Popescu said.