“The cash deficit target was set at 2.2% of the gross domestic product for 2014, wider by 0.2% than we estimated in July. The main reason for the higher deficit target is the government’s strong commitment to step up EU fund absorption, which means the authorities need to spend more on co-financing and the new deficit target allows just that,” IMF mission head Andrea Schaechter told a news brief in Bucharest.
Schaechter said the Romanian government had to identify additional resources to accommodate the wider deficit and compensate a planned increase in salaries and pensions.
“The key measures announced by the government would be indexing the excise duties to inflation, increasing fuel excises, as well as broadening the tax base in the property sector by including special structures and buildings,” Schaechter told reporters.
“The government has pledged to improve tax collection and reduce fiscal evasion.”
At the same time, Romania will continue its reforms in healthcare, energy and infrastructure, the IMF official added.
Schaechter commended Romania’s progress in drawing more structural funds from the European Union, but said the state’s contribution to EU-financed project has put additional pressure on the 2013 budget.
“Because of that, the 2013 budget deficit target had to be raised to 2.5% of GDP, with 0.2% of GDP allocated to co-financing of EU projects,” she said.
The government initially estimated a budget deficit of 2.3% of GDP in 2013.