The deficit has been revised upwards from 2.86% to 2.97% of GDP after including the impact of state-held companies.
For this year the deficit target using the European methodology – which includes the state’s arrears – is of 2.4% of GDP.
State-run companies that do not manage to cover at least 50% of their operating expenditures through their own resources influence the level of the budget deficit.
The higher 2012 deficit is due to some state-run companies which are over 50% financed from public resources being recategorized in the budget, as well as to recalculations of the deficits of some companies based on final data, according to the Finance Ministry.
In the past three years the Romanian Finance Ministry has managed to cut the country’s budget deficit mainly through tough austerity measures. Romania experienced two years of dramatic adjustments in 2010 and 2011: layoffs, a 25% cut to public sector employees’ wages and a VAT hike from 19% to 25%, while state-owned companies continued to record huge losses and generate arrears.
Romania is among the EU countries that made the biggest fiscal adjustments in the past few years, by six percent, according to data from Eurostat, the EU’s statistics bureau.
From a 9% budget deficit in 2009, Romania managed to reach a deficit of slightly less than 3% of GDP last year.
But after the first eight months of this year the budget deficit had already climbed to RON8 billion, with the rise of revenues not matching that of expenditures. Between January and August revenues went up by just 4.4%, while expenditures rose 4.8% year-on-year.
The budget deficit target for the end of September 2013 has been decided with the IMF at RON9.1 billion.
Budget Minister Liviu Voinea recently told ZF that nine-month deficit was within the target agreed with the IMF and that the second budget adjustment was aimed at keeping the budget deficit within the set targets.
Representatives of the IMF and the European Commission arrived in Bucharest on Tuesday for talks with the Romanian authorities as part of the first review of the new arrangement approved in September, with negotiations to also target the second budget adjustment and the 2014 budget.
(English version by Daniela Stoican)