Financiarul

The consolidated general budget deficit on the first nine months of the year accounted for 5.1 percent of the GDP and falls within the target fixed with the International Monetary Fund (IMF) and the European Commission for the end of Q3, of 5.4 percent of the GDP, announced on Saturday, on a TV channel, Minister of Public Finance Gheorghe Pogea.

Over the said period the budget revenues have seen a decline by 6.7 percent, said the Finance Minister.
Romanian authorities and IMF have agreed, after the IMF assessment mission in August, a budget deficit target for this year-end of 7.3 percent of the GDP (36.5 billion lei).

“We will present to IMF the way the Government fulfilled all agreement set conditions, afferent to the nine months”, said Pogea. A mission of the international financial institution will visit Romania over Oct. 28 – Nov. 9, at the request of President Traian Basescu, for a second evaluation of the agreement.

According th the IMF mission head to Romania Jeffrey Franks, it is possible that a new IMF delegation will be needed to continue negotiations after the new government is formed. The second agreement assessment mission was initially programmed at the end of October and the start of November, to evaluate the meeting stage of established conditions at the end of September.

The third IMF loan installment is of 1.409 billion DST (approximately 1.5 billion euros) and it is set to come in December, depending on the fund’s experts evaluation. Romania has a stand-by agreement with IMF spanning on 24 months, for 12.95 billion euros, the overall foreign loan from IMF, European Union, World Bank and the European Bank for Reconstruction and Development (EBRD) being in the amount of 19.95 billion euros.

Pogea stressed that half of the number two and number three installments from IMF and the EC loan represent foreign financing of the budget deficit and, in case the third installment fails to arrive from IMF, as well as the one from EC, alternative financing sources must be found and the most serious move would be to divert money from investments for the payment of pensions and wages.

The Ministry of Public Finance official warned that the current problem for the Romanian economy is the public deficit, and not the current account deficit, covered in proportion of 114 percent by direct foreign investments and which has declined “too steeply”. As for the conditions set in the IMF agreement, Pogea noted that the budget on 2010 is finalized, as well as the fiscal responsibility bill.