Romania's Jan-Nov Budget Deficit Widens to Almost 3.0%/GDP - Media

In October and November revenue to the budget was below estimates by some 5.0 billion lei ($1.66 billion/1.3 billion euro) as companies faced difficulties in paying taxes amid the economic crisis, Varujan Vosganian told financial daily Ziarul Financiar.

Romania's government plans to end 2008 with a budget deficit equivalent to 2.3% of the projected GDP. The target is below the 3.0% figure set under the EU's Maastricht criteria, which Romania must meet to qualify for the adoption of the euro currency.

Vosganian refrained from making forecasts for the country's budget deficit for 2008 and 2009.

Romania’s consolidated budget gap for the first 10 months of the year was equivalent to 1.5% of GDP, the country’s Deputy Finance and Economy Minister Eugen Teodorovici said earlier.

Romania, which joined the European Union last year, must meet the Maastricht criteria on inflation, public debt, budget deficit, currency stability and interest rates to qualify for the adoption of the euro.

Analysts have said Romania's economy faces the risk of hard landing next year with external financing shrinking as a result of the global credit crunch. The persistently loose fiscal policy of the outgoing Liberal-led government has raised fears of budget gap widening beyond the Maastricht criteria and taxes being raised to make up for dwindling budget revenue.

The government has said a prudent approach will be taken towards new hiring in the public administration and towards the handing out of bonuses to employees by the end of the year. It has also said that budget reserves will be used only for urgent or emergency spending.

According to Vosganian, the cabinet will have to save between one and two billion lei in December to keep the budget deficit in check.

The government targets budget revenue worth 47 billion euro ($60.4 billion) for 2008, or around 36.5% of GDP.

($ = 0.7782 euro)