Romania budget revision hikes 2024 deficit target to 6.94%/GDP
Writes through with details throughout
BUCHAREST, Sept 19 (Reuters) -Romania's coalition government will lower its economic growth assumption for this year and raise its fiscal deficit target, a budget revision plan showed on Thursday, to accommodate higher spending ahead of presidential and parliamentary elections.
The revised draft puts Romania's budget deficit target at 6.94% of economic output from an initial target of 5.0%, based on an economic growth assumption of 2.8%. The new deficit is in line with a recently increased 2024 funding plan, but most analysts widely expect the forecasts to be off the mark.
A median estimate in a Reuters poll puts economic growth at 1.9% overall this year.
The European Union state has yet to unveil a 2025 budget, with the coalition government mulling a seven-year time-frame to bring its deficit down under the bloc's 3% ceiling.
Romania holds presidential and parliamentary elections in November-December, following European and local polls in the first half of the year.
The coalition government has raised the minimum wage and has raised state pensions twice this year.
The country has the EU's fastest rise in wage costs and its widening budget deficit is limiting the central bank’s room to cut interest rates.
Major rating agencies have assigned Romania their lowest investment grades with a stable outlook, and Fitch Ratings recently said repeated fiscal slippage has damaged policy credibility.
Reporting by Luiza Ilie; Editing by William Maclean
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