Romania pinpointed in early November the new agreement with the IMF initially signed in September, thus securing a EUR 2bn support from the Fund – to be paralleled by another EUR 2bn credit line given by EU under a BoP support programme. Fiscal consolidation continues, even if at slightly slower than planned rate. Public y a total of 50bps debt remains at moderate level and the CA deficit has narrowed significantly. Inflation is at historic minimum and this allowed central bank to cut the policy interest rates in late September and early November to 4%.
But the government fails to provide the confidence needed by both investors and consumers. The tax hikes announced as part of the new agreement with the IMF, with the aim of pushing further the fiscal consolidation, generated already certain anxiety. Political tensions within the ruling coalition might accelerate driven by broad discontent with low standard of living.
Release Date: Tue, 05 Nov 2013