POGEA: Next year, we will continue to plug the deficit using loans

Romania will continue to resort to loans to finance its budget deficit for 2010, estimated at 5.9% of the GDP, Finance Minister Pogea yesterday said, during the CEI Summit Economic Forum. He said: "We will continue to finance the budget deficit through loans, just like all of Europe will. I want to say that we won"t raise VAT and we are expecting a slight economic growth of 0.5% for 2010. Romania has large costs with the state apparatus and the operation of state institutions. We will cut spending in these areas, and a sizeable percentage of those amounts will be redirected for investments and we expect our total receipts to increase by 10 billion".

The Minister of Finance said that next year the ministry would raise excises by around 14.24%, due to the depreciation of the leu against the Euro. He mentioned that the authorities are still reviewing how big the hike in excises agreed upon with the European Union would be. The increase is set to happen in two stages, in order to avoid hitting the population and companies with a sudden hike in the beginning of 2010. Minister Pogea expects the deficit to rise to 7%, amid an increase in spending by public authorities in the last two months of the year. According to Gheorghe Pogea, the government will submit the 2010 budget for approval once the Parliament passes the bill granting the former government the power to draft the budget for 2010. The Minister also said that the government is entitled to submit the law of fiscal responsibility to the Parliament in the near future (which it has been discussing with all the international financial institutions).