Economist Intelligence Unit expert Joan Hoey declared for HotNews.ro that Romania needs to modify its budget, as initial forecasts were too optimistic, estimating a 25% budgetary deficit in 2009 and a 2.5% economic growth. She declared that the budgetary revision was one of the main criteria when signing the IMF agreement. However, Hoey warned that presidential elections and union protests can become a threat for any budgetary modification.
Hoey explained that some specialists agree that Romania could have managed the crisis without taking a loan from the IMF and all the costs to be paid in the future are not worth it. However, she underlined that the private sector would have impeded Romania to finance its foreign obligations in the current economic environment. Hoey added that the external vulnerability lead to a constant depreciation of the national currency.
EIU expert declared that the budgetary revision was one of the main requirements for the IMF agreement and the government gave up its over-optimistic estimations and accepted the IMF one, revealing that Romania's economy will decrease by 4% in 2009. Thus a 37.5% expenses of GDP and incomes of 32.9% of GDP are scheduled.
EIU expresses its concern regarding the government's ability to maintain its expense limits, referring to the recent social protests in the public sector. Moreover, Hoey added that revenues will have to increase by 10.3% compared to last year while budgetary expense to increase by just 1%. The targets will be met only if the traditional boom in spending in the last quarter of the year will be avoided, Hoey said.