Romanian Economy minister forecasts a 7% budget deficit and an economy contraction of 6% for 2009

Romania’s budget deficit will reach around 7% of the GDP by the end of the current year, while the economy will see a 6% contraction, Romanian minister of Economy Adriean Videanu told the Money Channel, quoted by Romanian press agency NewsIn. His forecast is more optimist than the one made by the Finance minister, Gheorghe Pogea: he claimed Romania’s economy might contract by 6.5-7.1% this year.

„I believe that the 2009 (budget) deficit will be around 7% (of the GDP). The economic contraction will be around or below 6%, because of the agriculture, which is expected to bring a pretty contribution in the second part of the year,” Adriean Videanu said.

With these in mind, the Economy minister said it was „compulsory” that the budget deficit targets agreed with the IMF are renegotiated.

The Romanian authorities agreed with the IMF on certain trimestrial deficit targets. The total deficit amount for 2009 should not be over 24.3 billion lei. For the first trimester, the target deficit is 8.3 billion lei, for the second semester – 14.5 billion lei and 18.6 billion lei for the third. According to the Finance minister, the target for the first half-year was met. After the first evaluations, the first 2009 semester saw the deficit raising 2.7% of the GDP, slightly under the target agreed with the IMF (2.73%).