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Romanian government targets a budget deficit below 3% of GDP in 2012

Last evening, President Basescu made some statements after a meeting with the joint IMF, EU and World Bank mission: 2012 state budget will be built on a budget deficit below 3% of GDP (ESA95 methodology). On cash standards, the budget deficit will be 1.9-2.5% of GDP

− The officially estimated economic growth for 2012 is 1.7-2.7%. Energy and infrastructure investments are key growth drivers for the next year. Following a very good agricultural year, 2011 economic growth could stay at 2%, but President Basescu said this is more like a personal opinion

− C/A deficit will stay below 5% of GDP in 2011-12

− Public wages and pensions will not be cut. President Basescu did not provide additional details on this topic, but sources cited in the media said that the IMF agreed potential hikes in public wages and pensions in 2H12, if economic conditions are good

Our assessment: Our budget deficit forecast for 2012 is 4.2% of GDP. We do not rule out a revision of our forecast, if the government provides more details on selected categories of public expenditure and revenue and the budget passes through parliament. All in all, the continuation of the fiscal consolidation efforts should ensure Romania an easy access to capital markets in 2012. 5Y government yields could fall some 20bp in eight months’ time.

Sursa: http://www.bcr.ro

Tags: budget deficit below government

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