Finance Minister: "We Won"t Use The Foreign Loan To Pay Pensions And Salaries"

Andreea Arăboaei

"None" of the 5 billion EUR loan that Romania is going to receive from the European Commission will be used to finance salaries or pensions, but only the budget deficit, Finance Minister Gheorghe Pogea said yesterday. The statement was made after President Traian Basescu had said that some of the foreign loan could be used, as an exception, to pay pensions and salaries in case the crisis worsened.

Romania closed the first quarter with a budget deficit of 7.92 billion RON (1.5% of the GDP), below the Government"s commitment to the international lenders of the 20 billion EUR loan to have a deficit of up to 8.3 billion RON. "Romania met the deficit target decided with the IMF for the first quarter," Finance Minister Pogea said. He added that State revenue collection had improved in April compared to the first three months of the year, being by only 3% smaller than in April 2008. However, revenue collection in the first quarter was nearly 6% less than in the corresponding period of 2008.

State budget revenues decreased by 5.5% (2.2 billion RON) from 40.26 billion RON in the first quarter of 2008 to 38.06 billion RON, while spending increased by 14% to 45.98 billion RON from 40.32 billion RON. Provisional data released by the Finance Ministry indicated a deficit of 1.56% deficit and a 6.2% decrease in revenues.

For the entire year 2009, the expenses of the consolidated general budget are nearly 10.2 billion RON higher than in 2008, according to the Finance minister. "For the entire year 2009, the overall volume of the consolidated general budget expenses account for 199.3 billion RON, which is equal to 37.5% of the GDP. In 2008, when he had an economic growth of 7.1%, the expenses reached 189.1 billion RON. At least for this type of expenses, the commitments made for 2009 are nearly 10.2 billion RON higher. Despite the crisis, the forecast spending is higher than in 2008," Pogea added.

The minister explained that the increase was generated by the higher budget deficit, respectively 27.3 billion RON. "We are counting on structural funding from the European Union equal to 1.5% of the GDP and on reimbursable foreign loans of 4.3 billion. The revenues generated by the economy in the current crisis context total 31.45% of the GDP. We did not exaggerate when we projected this budget," Pogea added. Investments scheduled for this year, after the budget rectification, amount to 37.9 billion RON or 7.1% of the GDP, compared to 30 billion RON in 2008, Pogea said.