February 7 (SeeNews) - Romania's parliament approved on Tuesday the consolidated 2017 state budget, which projects a deficit equivalent to 2.99% of gross domestic product (GDP).
The 2017 state budget was adopted with 208 votes in favour and 107 against, according to data posted on the website of the upper house, the Senate.
The governing coalition of left-wing Social Democrat Party (PSD) and centre-right Liberal-Democrat Alliance (ALDE) control among themselves 250 of the 463 seats in parliament.
Members of parliament from opposition right-wing National Liberal Party (PNL) and centre-right Save Romania Union (USR) and Popular Movement Party (PMP) voted against.
Consolidated revenues are projected at 254.7 billion lei, or 31.2% of GDP, and expenditures are expected to reach 278.8 billion lei, or 34.2% of GDP. The resulting deficit of 24.1 billion lei is equivalent to 2.96% of GDP in cash terms and 2.99% of GDP under the the European System of Accounts (ESA) standards. According to the Maastricht treaty signed in 1992, the ratio of the annual general government deficit relative to GDP at market prices must not exceed 3% at the end of the preceding fiscal year.
The budget is built on projections of 5.2% economic growth in 2017.
At the end of January, Romania's president Klaus Iohannis said that the budget is too optimistic.
"It is an overvalued budget and there is no adequate explanation for this huge increase - we are talking of an increase of around 15% [in revenue]. Even if we consider that Romania's economy will grow, something that we all wish for, such a great increase is hard to achieve," the president said at the time.
Romania's consolidated budget showed a deficit equivalent to 2.41% of the projected GDP last year, compared to 10.3 billion lei shortfall, or 1.47% of GDP in 2015, according to finance ministry data.
Romania's economy expanded by 4.3% year-on-year in the third quarter of 2016, slowing down from 6.0% annual growth in the second quarter, provisional figures from the country's statistical board INS showed. In the first nine months of 2016, the economy grew by 4.8%. Romania's national output expanded by a real 3.8% in 2015, compared with a revised growth rate of 3.0% in 2014.
On January 21, Fitch Ratings affirmed Romania's long-term foreign and local currency issuer default ratings (IDR) at 'BBB-', with stable outlooks. Fitch said that Romania's ratings are constrained by fiscal uncertainties that stem from continued pro-cyclical fiscal loosening.
At the beginning of January, the World Bank forecast that Romania's economy will expand in 2017 and 2018 at 3.7% and 3.4%, respectively, and also warned on the possible negative effects of fiscal loosening.
(1 euro =4.4916 lei)