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2012 budget to be revised on Thursday, deficit to be widened to 2.25 pct of GDP


The draft budget revision to be approved by the Romanian Government on Thursday calls for a change of the budget deficit from 1.9 percent of gross domestic product to 2.25 percent, amid an increase in the general strengthened budget revenues by 0.62 billion lei and a rise in expenditure by 3.069 billion lei from the original scheduled figures.

(1 euro=4.5 lei)

The budget revision was agreed with the International Monetary Fund and the Romanian Tax Council says the new targets are in accordance with the provisions of the Law no. 291/2011 on approving the caps of indicators set in the fiscal-budgetary strategy.

Prime Minister Victor Ponta on Wednesday said most money at the budget revision will be assigned to the payment of the amounts representing repayments of pensions and the payment of the incapacitated persons' carers.

The 3.07 billion lei increase in the overall expenditure reflects the impact of the above-mentioned swap-type scheme of 'chain' repayment (2.26 billion lei with impact on 'other transfers expenditure' chapter - 712 million lei, 'transfers between the public administration units' - 850 million lei, 'capital expenditure' - 450 million lei, 'goods and services' - 250 million lei) on the one hand and the increase in the overall expenditure by 807 million lei, on the other.

Expenditure cuts are mainly set for the Projects financed by foreign non-repayable post-accession funds (minus 772 million lei), while the capital expenditure and other net transfers relating the compensation schemes are cut by 196 million lei and 1.156 billion lei respectively.

According to the draft budget revision, the 2012 revenues are slashed by 2.158 billion lei (0.4 pct of GDP), while the state budget expenditure on balance is cut by 753.8 million lei (0.12 pct of GDP).

The public sector gross basic wages will be raised 7.4 percent starting this Dec. as compared to this Nov. The impact of raising the public workers' pay by 8 percent in this June and by 7.4 percent starting Dec. on the budget expenditure is put at 1.525 billion lei (0.3 pct of GDP) for the full-year.

The repair measure of repaying the retirees the money levied in the first four months of this year for health insurance contribution will cost the budget 1.299 billion lei or 0.2 percent of GDP.