Romania's parliament approved a deficit-cutting 2015 budget bill on Sunday, sticking to a fiscal shortfall target agreed with the International Monetary Fund. Benefiting from continuous IMF-led supervision since 2009, after a real estate bubble burst, European Union member Romania has gradually cut its deficit and implemented reforms to restore the trust of investors after a recession.
Under the current deal which expires next year, Bucharest targets a deficit of 1.8 percent of national output, excluding defence spending, against a planned 2.2 percent for this year. As a Nato member bordering Ukraine and wary of Russian intentions in its tiny neighbour Moldova, Romania will ask Brussels for its defence spending to be exempted from calculating deficit targets.
The leftist government has pledged to increase its defence spending next year, which is expected to add another 0.3 percentage points to the fiscal deficit. The budget, which also forecasts economic growth of 2.5 percent, plans to hike the minimum wage in two stages to 1,050 lei ($292) per month from 900 lei currently. State pensions will rise by 5 percent, as will the wages of teachers and health and social security workers.
The Fiscal Council, an independent fiscal watchdog set up under the IMF deals, said the government has overestimated budget revenues by a calculated 2.35 billion lei ($642.87 million), or 0.3 percent of gross domestic product, raising doubt the deficit target can be met. The opposition Liberal Party, which voted against the budget, said it may challenge the bill at the Constitutional Court.
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