Bloomberg News

Romania in Talks With IMF to Raise 2013 Budget-Deficit Target

January 10, 2013

Romania is trying to convince its international lenders to widen its 2013 budget-deficit target because of slower economic growth and overdue debt, Minister Delegate for Budget Liviu Voinea said.

The goal may increase to 2.1 percent of gross domestic product from 1.8 percent, Voinea said at a joint news conference with Prime Minister Victor Ponta today in Bucharest. After meeting the European Union’s 3 percent limit last year, Romania may be able to exit the 27-member bloc’s excessive-deficit procedure, Ponta said.

Ponta’s three-week-old government is seeking to agree with the International Monetary Fund and the EU on this year’s budget based on an average leu rate of 4.5 per euro. The lenders plan to review the Balkan nation’s progress under a precautionary accord Jan. 15-29.

“These figures are still under negotiation with our lenders, but we’re obliged to include the payment of some overdue debt in the health care sector in this year’s deficit,” Voinea said.

The government revised its 2012 economic-growth forecast to 0.7 percent from about 1 percent and to 1.8 percent in 2013 from about 2 percent, Voinea said. The statistics office also revised 2011 expansion down to 2.2 percent from 2.5 percent, he told reporters.

The Cabinet plans to start talks over a third international loan that would act as an safety cushion against Europe’s sovereign-debt crisis as its 5 billion-euro ($6.5 billion) credit accord expires at the end of March.

Half of this year’s 3 billion-euro budget gap will be financed through domestic debt sales, with the other half to come from international sales, Ponta said.

The government, which needs to refinance 46.8 billion lei ($14 billion) of state treasuries maturing this year, according to the Finance Ministry, must also repay 1.2 billion euros from a 13 billion-euro IMF loan, Ponta said. Separately, the central bank owes 3.8 billion euros to the IMF in 2013.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net


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