IMF mission to Romania ends

imf mission to romania ends Economic activity in Romania remains strong, with unemployment at a record low, is one of the conclusions of an IMF staff visit to Romania

An IMF team was on a one-week visit to Bucharest, where they discussed with the Romanian authorities about the country's macro-economic prospects and budget policies for next year.


The visit was also designed as a preparation for a consulting mission due early next year. Economic activity in Romania remains strong with unemployment at a record low, is one of the IMF experts' conclusions. However, according to a news release issued by the international financial institution, "despite several years of strong growth, the budget deficit has gone up rather than down, as it should during good times, and the 2018 target remains at risk without further measures."


The 2019 budget and the medium-term financial framework should target smaller deficits, in line with the commitments to the European Union, and should keep the public debt to GDP ratio on a downward trend. In this respect, current initiatives to improve the efficiency of public spending, such as expenditure reviews and centralized procurement, are welcome, says the IMF, adding that the modernization of revenue administration is also essential.


IMF experts also argue that increases in public-sector salaries and planned changes to pension benefits should be reassessed for their negative implications for fiscal sustainability and long-term growth.


Also, in view of enhancing the economic growth potential, structural reforms and good governance are needed. In this regard, strengthening the institutions in charge with public investment is a priority, to help address Romania's large infrastructure gap, including by means of facilitating better absorption of EU funds, reads the IMF news release.


The Fund forecasts a 4% growth rate for 2018, a 3.5% year-end inflation rate, relatively stable current account deficit in the medium run and a budget deficit of over 3% of the GDP, both this year and in 2019, if current policies are maintained.


In turn, the European Bank for Reconstruction and Development estimates a 4.2% economic growth rate in Romania this year, with a slow-down to 3.6% in 2019. The IMF and EBRD forecasts are significantly higher than the ones made by the European Commission, which expects Romania's economic growth rate to go down to 3.6% this year and 3.8% next year, as the rise in private consumption will slow down and the negative balance of trade will deepen.



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Publicat: 2018-11-13 14:12:00
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