The European statistics office Eurostat has recently expressed its concern over the quality of data reported by Romania on its 2010 budget deficit, calculated based on the ESA95 standard. This was triggered, among others, by the uncertainty of the impact some state companies which posted losses, like CFR Infrastructura (the railways company) and Termoelectrica had over the budget deficit in Romania.

Romania's Statistics Institute has recently sent additional data to Eurostat in order to analyse whether companies like CFR Infrastructura and Termoelectrica should be included in the public administration sector, rather than in the general economy sector. Romania's Finance Minister Gheorghe Gherghina has recently said Romania hasn't sent incorrect data regarding the budget deficit, but some data on state companies were intermin. However, after including the Termoelectrica and CFR Infrastructura losses, the budget deficit should go up to 6.8-6.9 percent of the country's GDP. The previously reported level was of 6.4 percent, which would still be below the 7.8 percent of the GDP agreed with the International Monetary Fund and the European Commission, according to the Finance Minister.

Romania's Statistics Institute performs tests two times a year to see in what category should state companies be included. They check whether there are companies which can't cover at least half of their expenses out of their own revenues. These companies are taken out of the general economy sector and included in the budget sector. If these companies fail to cover half of their expenses for three years in a row, they are included in the budget deficit, according to Gherghina.

According to the agreement Romania has with the International Monetary Fund and the European Commission, the budget deficit should be calculated monthly in two ways: the non-financial accounts method and the financial account method.

The first one establishes the budget deficit by taking out expenses of the revenues in the general consolidated budget, while the second also includes the state's arrears, the Finance Minister also explained. The Romanian Central Bank (BNR) checks the results calculated through the financial account method, while the Statistics Institute checks the other one. “We need to clarify who is right, the National Bank or the Statistics Institute,” Gherghina added.

The IMF has compelled Romania to include the losses of 30 central and local state companies in this year's budget deficit, as well as the titles issued by the Proprietatea Fund. The budget deficit is expected to go down to 4.4 percent this year and 3 percent in 2012.

editor@romania-insider.com