Gov’t plans to massively cut goods, state services expenditure to curb deficit, sources say

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The Romanian Government will have to take measures to massively cut the expenditure for goods and services of the central and local administration so as to meet a much lower budget deficit target than 3 percent by ESA (European System of Accounts) for 2012, governmental sources said.

„Even though expenditure had been previously cut, such as cuts to limit the funds for the petrol used in administration, rationing can further be made. There is room for spending rationing in the local administration, in particular”, the sources said.

Massive spending cuts will be operated in the state companies next year, also by axing jobs, in order to attain a narrowed budget deficit target, given that the ESA calculation for the budget deficit takes into account the losses incurred by the state companies as well, the sources added.

They announced that chances to see the pensions index-linked or the public sector wages increased are considerably lower if the budget deficit target is set at 1.7 percent of GDP next year.

President Traian Basescu on Monday evening, after talks with Prime Minister Emil Boc and several Cabinet ministers and with the National Bank governor, said that Romania should consider a 2102 budget deficit much lower than 3 percent of GDP.

„The budget deficit target should be revised. Due to the financing costs, it is well to consider a a 2012 budget deficit much lower than 3 percent of GDP calculated by ESA,” Basescu said.

„We must find the solutions with the least impact on the population when we discuss the reduction of the 3 percent deficit in ESA terms, let us say to 1.5-1.7 percent, somewhere around this figure. Maybe. Do not take it as definite. It is only a hope. The Government must analyse where the things that can be explained and done are, but, I repeat, pension or salary cutbacks are out of question,” the President said.

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