Rating agencies: Romania should focus on budget deficit

“Romania committed, within the context of the agreement with the IMF, supported by the European Union, to significantly consolidate its budget in terms of both expenses and revenues, with the purpose of narrowing the budget deficit to less than three percent of GDP [gross domestic product] in 2011. (...) Any fiscal measures, including those regarding taxation, should be viewed in the context of goals related to the consolidation strategy,” Marko Mrsnik, Standard&Poor’s analyst, told Business Standard.

President Traian Băsescu’s political offer to maintain the 16 percent flat tax means finding solutions to compensate for the decline in budget revenues, by raising taxes in other fields or cutting expenses. “It is an issue related to setting priorities,” Kenneth Orchard, Moody’s Investors Service analyst, declared for Business Standard. “With a deficit that already amounted to 4.4 percent of GDP in August, according to the Minister of Finance, it seems to me that a certain narrowing is necessary to consolidate the 7.3 percent target for the whole year, agreed upon with the IMF, considering that, as the past few years indicate, the budget deficit tended to widen fast in the fourth quarter,” Andrew Colquhoun, Fitch Ratings analyst, indicated .