ECONOMY

Bucharest runs a small surplus in the first nine months of this year

BUCHAREST (Reuters) – Romania’s consolidated budget recorded a surplus of 0.2 percent of gross domestic product in the first nine months of the year, Finance and Economy Ministry data showed yesterday. European Union newcomer Romania targets a deficit of 2.8 percent of GDP this year, but ministry officials have repeatedly said it will be much smaller. Ministry data for January-September showed a consolidated nominal surplus of 732 million lei ($316.1 million). Revenues totaled roughly 92 billion lei, or 23.6 percent of GDP, while spending reached 91.2 billion lei – 23.4 percent of GDP. Romania’s 2007 budget plan projects revenues and spending at 36.1 and 38.9 percent of GDP respectively. The end-year nominal deficit target is seen at roughly 10 billion lei. Earlier in October, the centrist minority government approved a budget plan for 2008 that boosts investment plans as well as social spending and sets a deficit target of 2.7 percent of GDP. Romania, which has been criticized by international observers for unpredictable budget spending and insufficient transparency, badly needs to make improvements in infrastructure and public finances. Observers have also warned that Romania’s fiscal policy is pro-cyclical and puts the burden of containing inflation solely on the central bank. The International Monetary Fund recently said the government should aim for a deficit of around 1.5 percent of GDP next year and urged Romania to plan fiscal policies better in the longer term in order to offset political and economic risks to sustainable growth.