ECONOMY

New EU member records deficit

BUCHAREST – Romania’s consolidated budget ran a deficit of 0.19 percent of gross domestic product (GDP) in the first half of the year, from a surplus of 0.16 percent of GDP in January-May, finance ministry data showed. The European Union newcomer targets a shortfall of 2.8 percent of GDP this year, although Brussels has said its calculations put the deficit at 3.2 percent, above the bloc’s 3 percent Maastricht cap. Finance and Economy Minister Varujan Vosganian recently said the Black Sea state aims to lower the gap slightly next year, with a first draft of the 2008 budget plan envisaging a deficit of 2.7 percent of GDP. Ministry data for the first half showed a consolidated deficit of 750 million lei (-236 million). Revenues totalled 58.6 billion lei, or 15 percent of GDP, while spending reached 59.3 billion lei – 15.2 percent of GDP. Romania’s 2007 budget plan projects revenues and spending at 35.6 percent and 38.3 percent of GDP, respectively. The year-end nominal deficit is seen at roughly 10 billion lei. A first draft of next year’s budget has revenues at 39 percent of GDP and spending at 41.7 percent – the highest level in 17 post-communist years. Analysts warned Romania runs the risk of overshooting its deficit target in 2008, an election year, with officials under pressure to boost their popular ratings by raising wages instead of much-needed infrastructure investments. Parliament has already cleared a law that nearly doubles state pensions over the next two years, and the opposition Social Democrats have threatened to reject the 2008 budget law unless more cash is given to pensioners.