In the wake of recent talks with the International Monetary Fund, the Nastase-led Romanian Government has set the main macroeconomic targets for this year: 5.5% economic growth, 9% inflation rate December to December, current account deficit of 5.5% of GDP. The only point of discord was the budget deficit, over which the two sides disagreed.
"The main objective of the government is to cut down inflation to 9% by the end of this year. Deflation is Romania's main credibility factor in 2004," Romanian Finance minister Mihai Tanasescu stated. However, Tanasescu was unable to point to an average annual inflation target, against the 15.3% level registered at the end of 2003.
Mihai Tanasescu says that fiscal policy will be used as a main deflation anchor. Thus, the budget deficit will not exceed 3%, with its exact level being discussed with the IMF. Tanasescu says that the Fund would like the deficit to be 0.2% below the level proposed by the Romanian government. Discussions are rendered more difficult by the IMF's requirement that the budget deficit should also include expenses linked to infrastructure projects carried out under a public-private partnership, while Romania states to the contrary.
The Finance Ministry has not disclosed last year's budgetary exercise yet and therefore there are no clear figures referring to the deficit level registered in 2003.
Mihai Tanasescu states that the 9% inflation target is assumed along with the condition that the 5.5% economic growth target should be maintained. "Cutting inflation to a single-digit rate is also the main priority of the National Bank of Romania, which will further promote a tight monetary policy," Tanasescu stated. razvan.voican@zf.ro
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