Budget Deficit Will Reach 5.5% of GDP In 2009

While the latest data from the Romanian Ministry of Finance indicates that the government is on track to meet its budget deficit target of 4.6% of GDP (5.1% of GDP under EU accounting standards) this year, we caution that the risks that the government will exceed this limit is elevated. We are particularly concerned by the cyclical nature of government spending, and the likely uptick in spending ahead of the presidential election which is scheduled for the latter months of the year. As such, we forecast a budget deficit of 5.5% of GDP in 2009.

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