September 27 (SeeNews) - Romania could slightly undershoot the full-year budget gap target of 2.8% of GDP, but risks for fiscal slippages in 2017 and beyond remain elevated amid populist fiscal initiatives in parliament, analysts said on Tuesday.
On Monday, Romania's finance ministry said that the country's consolidated budget showed a deficit equivalent to 0.4% of the projected 2016 GDP for the first eight months of the year. The deficit totalled 3.1 billion lei ($783 million/696 million euro) for the January-August period, as revenue fell 1.9% on the year to 147.2 billion lei, while spending rose 4.7% to 150.3 billion lei.
"This remains well below plan, as the initial target for the first three quarters of 2016 was a -2.2% of GDP. Poor investment spending is the likely reason for this, while the deterioration compared with 2015 came amid higher pension and wage expenditure," ING analysts said on Tuesday in a daily comment on the financial markets.
Romania's consolidated budget showed a 6.46 billion lei surplus equivalent to 0.92% of GDP for the first eight months of 2015, according to finance ministry data.
All in all, ING analysts said they do see the possibility of a slight undershooting of the full-year target of -2.8% of GDP, in cash-based methodology, but noted that risks for fiscal slippages in 2017 and beyond remain elevated amid populist fiscal initiatives in parliament.
In a separate daily analysis, Raiffeisen Bank analysts noted that while increasing in August, Romania's budget deficit is still at a low level compared to the target set for the full year.
A deficit equivalent to 2.95% of GDP is projected in Romania's 2016 budget bill adopted on December 7, 2015, However, the country's prime minister Dacian Ciolos, who took office in November following his predecessor's resignation, has said the government expects the 2016 budget gap to be equivalent to 2.8% of GDP.
The country's consolidated budget for 2015 showed a deficit of 1.47% of GDP, below the 1.85% limit set in the fiscal strategy for that year.
For the January-July period of 2016, Romania's posted a budget deficit equivalent to 0.2% of GDP.
(1 euro=4.4504 lei)