Romanias new government to re-negotiate 2012 budget deficit target.

By bne IntelliNews May 3, 2012
Romania's new cabinet of PM designate Victor Ponta will re-negotiate the budget deficit target with the IMF and the EC, leaving it within the 3%-of-GDP limit set under European ESA'95 methodology, candidate finance minister Florin Georgescu was quoted as saying by daily Ziarul Financiar. Currently, the deficit target is set at 1.9% of GDP under the domestic, cash based methodology but there is also a limitation set at 3% of GDP under ESA'95. A wider cash-based deficit would be necessary for the planned public wage hike and for servicing the government's overdue obligations to pensioners, Georgescu explained. The candidate finance minister is expected to meet the IMF expert team in Bucharest today. IntelliNews Comment : The nomination of central bank's deputy governor as finance minister in Ponta's cabinet was already received with confidence by investors. Central bank governor Isarescu also stressed that this nomination guarantees a certain fiscal discipline. But the central bank still interrupted this week its interest rate cuts cycle started last autumn, even if admitting that there is still room for further cuts. As former finance minister under the leftist cabinet of PM Nicolae Vacaroiu and deputy governor of the central bank, Georgescu should benefit from certain credibility before the IFIs. But Georgescu has also used public spending as means to spur [unsustainable] economic growth during 1992-1995. The lack of structural reforms in these years has severely damaged the country's banks. Georgescu has supervised the banking system therefore he was not directly involved in public finance in the past years. Except for huge required reserve levels, the central bank took very few steps to prevent excessive lending, particularly forex lending, before the 2008 crisis.

Related Articles

Romania to spend EUR 37mn in 2013 to close down loss-making coal mines.

Romania's government has earmarked RON 163mn (EUR 37mn) worth of subsidies for 2013 under a programme aimed at closing down the loss-making mines of local company CNH located in the southwestern ... more

Romanias Hidroelectrica sells nearly 0.3TWh of electricity on free market.

Romanian state-controlled hydropower company Hidroelectrica sold on Thursday, March 21, in several separate contracts a total of 0.3TWh of baseload electricity deliverable between April 1 and the ... more

Romania to start privatisation of cargo railway company on April 6-8.

The Romanian government will publish the privatisation call for freight railway company CFR Marfa immediately after the consultants complete their work, probably on April 6-8, Romanian transport ... more

Register here to continue reading this article and 2 more for free or purchase 12 months full website access including the bne Magazine for just $119/year.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

Thank you. Please complete your registration by confirming your email address.
A confirmation email has been sent to the email address you provided.

To continue viewing our content you need to complete the registration process.

Please look for an email that was sent to with the subject line "Confirmation bne IntelliNews access". This email will have instructions on how to complete registration process. Please check in your "Junk" folder in case this communication was misdirected in your email system.

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

If you have any questions please contact us at sales@intellinews.com

Subscribe to bne IntelliNews website and magazine

Subscribe to bne IntelliNews website and monthly magazine, the leading source of business, economic and financial news and commentary in emerging markets.

Your subscription includes:

Already a subscriber or registered - click here to recover access.

If you a IntelliNews Pro user - click here to login.

bne IntelliNews
$119 per year

All prices are in US dollars net of applicable taxes.

If you have any questions please contact us at sales@intellinews.com

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 296
Dismiss