Revenue in the January-July period stood at 70.9 billion lei ($29.6 billion) and represented 18.2% of GDP. Expenditure totaled RON69.05 billion, or 17.7% of GDP.

The state budget, which makes up the bulk of the country's general consolidated budget, posted a deficit of RON3.55 billion in January-July, but was offset by surpluses for the local and social security budgets.

In the first half of 2007, the general consolidated budget posted a deficit of 0.19% of GDP, compared with a surplus of 1.12% of GDP in the corresponding period a year earlier.

Romanian Finance Minister Varujan Vosganian said last week that he expects a year-end budget deficit of about 2% of GDP, which is below this year's budget deficit target of 2.8% of GDP and below the European Union's 3%-of-GDP budget deficit limit.

Romania should avoid any risk of exceeding the E.U. limit, he said.

The European Union has warned newcomer Romania that it may face disciplinary action as its 2007 deficit is likely to exceed the E.U. limit. According to E.U. accounting methods, the Romanian budget deficit will total 3.2% of GDP this year.

In 2006, Romania's budget deficit, according to the European System of Accounts, stood at 1.9% of GDP, compared with the 1.7% of GDP calculated by the Romanian authorities.

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