Romanian prime minister expects public deficit over 8% of GDP this year: "budget execution was worse than expected"

Defending the tougher-than-initially-planned measures in the second reform package, Romanian prime minister Ilie Bolojan explained that a budget deficit of nearly 10% can not be addressed with soft measures and estimated that the gap will remain above 8% of GDP this year.

The statement marks a marginal worsening from his previous statements in August, when an 8% deficit was also mentioned.

"The budget's situation was worse than we knew two months ago when we took over the office," PM Bolojan said, as reported by Digi24.

"Since then, we have adopted several measures to reduce the deficit, attract EU funds, and correct injustices," he added.

The two rating agencies, having already affirmed Romania's fragile rating just above the non-investment area, expressed expectations for a budget deficit of around 7.5% of GDP – but this is in ESA terms.

In principle, the ESA deficit should be lower than the cash deficit [targeted by PM Bolojan], but the differential is shrinking as the government will have to defer again some payments – a strategy that resulted in the wide ESA-cash differential last year [8.65% cash deficit versus 9.3% of GDP ESA deficit].

(Photo source: Inquam Photos/Malina Norocea)