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Raiffeisen : Budget deficit forecast grows to 7.3% of GDP in 2009

Raiffeisen Bank has reviewed its estimate about Romania's budget deficit at the end of 2009 from 5.5% to 7.3% of GDP. For 2010 the new estimate is 5% of GDP for Romanian accounting standards, according to a report made by bank analysts.Previously, Raiffeisen Bank had foreseen that Romania's budget deficit would reach 3.5% of GDP in 2010.

According to international accounting standards ESA95, Romania’s budget deficit will grow to 7.5% of GDP in 2009 from 6% the previous estimate, while in 2010 the public deficit will be 5.3% of GDP compared to 4% of GDP in the previous report.“Government officials said that budget deficit at the end of June was under the target established with IMF, representing 2.7% of GDP, which means 14.5 billion lei. However,  the government intends to negotiate with the IMF team a revision of the established target for budget deficit at the end of the year at 4.6% of GDP. We think  the IMF team would accept a target growth for public deficit by cutting current expenses and by directing more money to public investments,” Raiffeisen Bank report shows.

 

At the same time, state budget incomes will represent 31% of GDP this year and in 2010, while expenses will be 38.5% of GDP in 2009 and 36.3% next year, bank analysts show.

Romania’s public debt, also expressed according to ESA95 standards, may reach 18% of GDP in 2009 and 20% in 2010.

 

The government agreed in the financing arrangement of 20 billion euros with international institutions to maintain this year’s budget deficit at 4.6% of GDP,  according to Romanian standards or 5.1% of GDP according to ESA95 standards. IMF established quarterly targets of budget deficit for Romania: no more than 14.5 billion lei at the end of quarter 2, 18.6 billion lei for quarter 3 and 24.3 billion lei at the end of 2009.

 

Finance minister Gheorghe Pogea declared recently that he would negotiate with IMD a budget deficit at least equal the drop of economic incomes and pointed out that  “the income level for quarter 1 was 5.1% lower compared to the same time 2008 and reflects the effects of the financial and economic crisis on private capital in particular.”

 

The head of IMF mission in Romania, Jeffrey Franks said on Tuesday that the Fund should be flexible in Romania’s case, as long as they had this attitude towards other states in the area, considering that economies had registered important drops both in Romania and other countries.

On the other hand, Raiffeisen analysts estimate a lower level of foreign exchange reserves of the central bank at the end of 2009 – 27 billion euros. The amount is similar to the one foreseen for 2010, compared to the previous analysis when they anticipated 28 billion euros for the end of 2009 and 25 billion euros for 2010.

 

Analysts of the Austrian financial group Raiffeisen estimate a contraction of Romanian economy by 6% in 2009. Romanian economy contracted in the first quarter by 6.2% compared to the same period of 2008, according to reviewed data published by the National Statistics Institute, the decline being bigger than the one estimated by experts.

Sursa: http://www.actmedia.eu

Tags: budget deficit romania billion according estimate raiffeisen standards

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