2017.05.2604:13:00UTC+00Romania's Budget Deficit To Exceed Target: IMF

Romania's budget deficit is set to exceed the target this year without additional effort, the International Monetary Fund reported Thursday.

Concluding the Article IV Consultation, the executive board of the IMF said the deficit is forecast to widen to 3.7 percent of GDP on account of new wage and pension increases and tax cuts in the 2017 budget.

The deficit is forecast to widen to 3.9 percent of GDP in 2018.

Without timely action, reducing the deficit to 3 percent may require withholding the automatic 10 percent spending buffer and delaying capital spending, both of which are less desirable ways to achieve the target, the lender cautioned.

Economic growth is forecast to reach 4.2 percent this year, supported by continued stimulus to private consumption from a new round of fiscal relaxation and wage increases. The IMF expects growth to ease to 3.4 percent next year.

The agency noted that the main risks to the economic outlook include a perception of weakening fiscal prudence or institutions, which could adversely affect market confidence.

The executive board welcomed Romania's progress in reducing economic imbalances after the global financial crisis.