Romanian Cabinet Approves 2013 Budget That Trims Deficit to 2.1%Andra Timu and Irina Savu
Romania’s government approved the 2013 budget that targets cutting the deficit to 2.1 percent of economic output by boosting taxes on energy companies.
Prime Minister Victor Ponta’s Cabinet forecasts gross domestic product will rise 1.6 percent, compared with 0.2 percent expected for 2012, Finance Minister Daniel Chitoiu told reporters in Bucharest today. The government had previously estimated GDP growth of 0.7 last year and 1.8 percent this year.
The Balkan nation is in talks with the International Monetary Fund and the European Union for a third international loan that would act as a safety cushion against Europe’s sovereign-debt crisis as its 5 billion-euro ($6.6 billion) credit accord expires at the end of March.
“Our economic growth forecast for this year is very conservative,” Liviu Voinea, the minister delegate for the budget, said in Bucharest today. “We’ve agreed with the IMF, the EU and the World Bank that this forecast is realistic and well grounded.”
The government, approved by lawmakers last month, is counting on improved tax collection and plans to introduce a 60 percent tax on natural-gas liberalization revenue and a temporary special tax of 0.5 percent of total sales on natural resources on items other than natural gas for energy companies from Feb. 1 through 2014. It will also seek to increase a tobacco levy from April.
The boost in state revenue will trim the shortfall from 2.3 percent of GDP last year while allowing increases in state salaries and pensions. The government aims to keep the budget gap under control so it can exit an EU excessive-deficit procedure.
“It’s not an austerity budget,” Voinea said. “We have the IMF’s approval for this budget and for the measures we plan to introduce.”
The 2013 budget plan still needs Parliament’s approval and lawmakers have the right to add amendments to the project.
Last year’s budget deficit figure was revised upward from 2.2 percent of GDP, according to a document published on the ministry’s website today.