Gov’t 2009 deficit reaches 7.2pc of GDP

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The implementation of the 2009 Romanian Government aggregate budget has generated a deficit estimated at RON 36.4 billion (nearly 6.5 billion euros), or 7.2 percent of the Gross Domestic Product (GDP), slightly below the targeted RON-36.6-billion deficit agreed upon under a stand-by arrangement concluded with the International Monetary Fund (IMF), show data released on Monday by the Finance Ministry (MFP).

Revenues stood at RON 156.6 billion, down 5,4 percent, or 1.8 percent of the GDP, from the year before as a result of falling profit tax revenues (-8.9 percent), Value-Added Tax revenues (-16 percent), and falling customs tax revenues (-31.9 percent).
The declining revenues are said to have been partially offset by rising income tax revenues (±0.3 percent), excise duties (14.2 percent) and rising property rates and taxes (±3.8 percent). Aggregate spending totalled RON 193 billion, up 1.4 percent from 2008.

Staff costs increased 2.4 percent year on year. MFP explains that the rise was mainly the result of wage increases approved in the second half of 2008. Spending on goods and services declined 12.6 percent year on year as a result of restraint measures approved by the Government.
Social security spending increased by RON 9.8 billion from 2008 as a result of an increase in the reference pension computation point in October 2008 and the coming into force in April 2009 of the minimum social security pension.

In order to contain the effects of the ongoing economic and financial crisis on vulnerable social categories, says MFP in a press release, the Government took some measures to protect the people on low income: granting a minimum social security pension to pensioners on small income – bringing the lowest pension to RON 300 on April 1, 2009 and to RON 350 as of October 1, 2009; indexing pensions by 3 percent on April 1, 2009 and by a further 2 percent on October 1, 2009; increasing the minimum guaranteed income by 15 percent, fully covered by public money.

Spending on bank interest surged 66 percent from the year before as a result of worsening domestic and international deficit financing conditions. Investment spending, including capital spending and transfers of development funds, stood at RON 35.2 billion in 2009, that is 7 percent of the GDP.

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