A press release issued by the Ministry of Economy and Finance (MEF) indicates that the EIB loan is aimed to co-finance investment projects eligible for non-reimbursable EU assistance for transportation, environment, and to competitively increase and finance priority programs which not eligible for non-reimbursable EU funds. However, sources told Business Standard that the budget deficit could exceed the 3 percent gross domestic product (GDP) limit permitted by the EU, even reaching 3.8 percent in 2008 and a staggering 5 percent in 2009.
According to MEF, some RON 7 billion (€1.84 bln) are needed to finance the budget deficit. Some €1.05 billion were collected from state bond issues and a further €0.81 bln are still to be gathered by year-end. Analyst Gabriel Biris said Romania’s budget deficit could widen beyond 3 percent, given financing access is restricted and government spending usually adds to the deficit at the end of the year. “I do not believe that banks have sufficient liquidity to buy bonds worth RON 3 billion [€0.81 bln],” he indicated.
