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Romania adopts 2013 draft budget with 2.1% deficit

07 February 2013, 17:00 CET
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(BUCHAREST) - Romanian lawmakers on Thursday adopted a 2013 draft budget that targets economic growth of 1.6 percent and a public deficit equivalent to 2.1 percent of the nation's output.

A total of 309 MPs voted for the bill and 108 against.

"This is not a perfect budget but it is the best budget we could have today," Prime Minister Victor Ponta said after the vote.

Budget Minister Liviu Voinea said recently that the 2013 finance law was "development oriented", and stressed that a large share of public expenses would be earmarked for investment in major projects.

Following negotiations with the International Monetary Fund and the EU, the government trimmed its growth forecast from 1.8 to 1.6 percent.

In 2012, gross domestic product is expected to have expanded by a meagre 0.2 percent.

The public deficit has been revised upwards meanwhile from 1.8 to 2.1 percent of GDP (compared with 2.2 percent of GDP in 2012), to include payment arrears accumulated by public hospitals.

The draft budget also foresees a 4.0-percent rise in pensions and an increase of the minimum wage from 700 lei ($219) to 800 lei.

To compensate for a hike in public spending, the centre-left government plans to raise taxes on gas, oil and mining companies.

The new taxes, which have drawn criticism from some of the companies affected, are expected to bring in additional revenues estimated at $935 million.

The funds would be used to co-finance projects that benefit from European aid.

Romania, a member of the EU since 2007, is slowly recovering from two years of severe recession (2009 and 2010), when its economy contracted by nearly 8.5 percent.


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