Radio România Internațional

Tag: the IMF

  • Economic Forecasts

    Economic Forecasts

    Just like most European Union Member
    States, Romania has reported a significant economic growth for 2017 and is
    anticipating similar results for 2018. Our country has all the more reason to
    feel proud, as there is a wide percentage gap separating it from the other
    Member States. Take France, for instance, whose GDP last year hit its highest
    level in the last six years, standing at merely 1.9%. Romania on the other hand
    had a 6% growth rate, which made France Press news agency label it as Europe’s
    tiger.

    On Sunday, the National Forecast Commission made public its
    predictions for 2018, upgrading to 6.1% its GDP growth forecast. At the same
    time the Commission maintained its forecast for 2019 and 2020 at 5.7% and at 5%
    for 2021. Although positive, the forecasts of Romania’s external partners are
    less optimistic. The European Commission expects Romania’s economic growth to
    stand at 4.4% in 2018, which mirrors the latest forecast of the International
    Monetary Fund. The World Bank estimates a 4.5% GDP growth rate, whereas the
    European Bank for Reconstruction and Development estimates a growth rate of
    4.2%.

    Yet what makes Romanian economy so competitive? What is the secret behind
    this success, in a country facing severe labour shortage, rising migration and
    waning demographics? While the repeated Governments of the ruling coalition in
    Romania, made up of the Social-Democratic Party and the Alliance of Liberals
    and Democrats, have taken credit for Romania’s bolstering growth in 2017,
    Romanian citizens themselves are more likely to have contributed to this
    phenomenon, by increasing consumption.

    Both economic pundits and Central Bank
    experts agree that Romania’s growth rate is likely to slow down in 2018,
    evidence of which can be found in the latest forecasts by international
    financial institutions. It’s unlikely, experts argue, that the authorities will
    be able to uphold the current growth parameters, given that this was the effect
    of salary increases. In a recent report, a commercial bank in Romania points
    out that the recent fiscal uncertainty and populist measures have kept
    investments away.

    Moreover, should the Government resort to additional tax
    increases and cuts in public spending so as to observe the 3% budget deficit
    target, this might further slow down economic growth. As for the industrial
    output, it is expected to go up due to the rising demand on European markets.
    Still, imports are expected to rise faster than exports, as they cover a large
    part of the domestic demand. Therefore the coming years might prove relatively
    difficult for the Romanian economy, and the tiger might turn out to be yet
    another bubble.



  • Economic Forecasts

    Economic Forecasts

    Just like most European Union Member
    States, Romania has reported a significant economic growth for 2017 and is
    anticipating similar results for 2018. Our country has all the more reason to
    feel proud, as there is a wide percentage gap separating it from the other
    Member States. Take France, for instance, whose GDP last year hit its highest
    level in the last six years, standing at merely 1.9%. Romania on the other hand
    had a 6% growth rate, which made France Press news agency label it as Europe’s
    tiger.

    On Sunday, the National Forecast Commission made public its
    predictions for 2018, upgrading to 6.1% its GDP growth forecast. At the same
    time the Commission maintained its forecast for 2019 and 2020 at 5.7% and at 5%
    for 2021. Although positive, the forecasts of Romania’s external partners are
    less optimistic. The European Commission expects Romania’s economic growth to
    stand at 4.4% in 2018, which mirrors the latest forecast of the International
    Monetary Fund. The World Bank estimates a 4.5% GDP growth rate, whereas the
    European Bank for Reconstruction and Development estimates a growth rate of
    4.2%.

    Yet what makes Romanian economy so competitive? What is the secret behind
    this success, in a country facing severe labour shortage, rising migration and
    waning demographics? While the repeated Governments of the ruling coalition in
    Romania, made up of the Social-Democratic Party and the Alliance of Liberals
    and Democrats, have taken credit for Romania’s bolstering growth in 2017,
    Romanian citizens themselves are more likely to have contributed to this
    phenomenon, by increasing consumption.

    Both economic pundits and Central Bank
    experts agree that Romania’s growth rate is likely to slow down in 2018,
    evidence of which can be found in the latest forecasts by international
    financial institutions. It’s unlikely, experts argue, that the authorities will
    be able to uphold the current growth parameters, given that this was the effect
    of salary increases. In a recent report, a commercial bank in Romania points
    out that the recent fiscal uncertainty and populist measures have kept
    investments away.

    Moreover, should the Government resort to additional tax
    increases and cuts in public spending so as to observe the 3% budget deficit
    target, this might further slow down economic growth. As for the industrial
    output, it is expected to go up due to the rising demand on European markets.
    Still, imports are expected to rise faster than exports, as they cover a large
    part of the domestic demand. Therefore the coming years might prove relatively
    difficult for the Romanian economy, and the tiger might turn out to be yet
    another bubble.



  • November 28, 2017 UPDATE

    November 28, 2017 UPDATE


    DEFENSE – Romanias Higher Defense Council, which convened in Bucharest on Tuesday, decided to maintain in 2018 the 2% share of the GDP earmarked for defense, just like this year, according to a communiqué issued by the Presidential Administration. The other institutions in the field of national security will next year get similar budgets too. The Defense Council also decided to increase the number of soldiers, gendarmes and police staff who next year will take part in missions abroad. 1,775 soldiers, 286 more than this year, will be deployed abroad next year, mostly in Afghanistan. Also, 1,867 gendarmes and police staff will take part in foreign missions under the aegis of the EU, the OSCE, NATO and the UN. By taking part in such missions, the Romanian state gets actively involved in promoting regional and global stability and security and in combating international terrorism. Also at the meeting held on Tuesday, the report on the measures adopted by Romania to enforce the sanctions set at international level between October 2016 and September 2017 was analysed and approved.



    JUSTICE – The US should trust Romanias Parliament, whose aim is to strengthen the independence of the judiciary and to eliminate any political interference in the functioning of the justice system, reads a press release communicated on Tuesday by the Senate Speaker Calin Popescu-Tariceanu and the Speaker of the Chamber of Deputies Liviu Dragnea. The reaction came after the US Department of State published on Monday, on the institutions website, an official statement expressing concern over the fact that the Romanian Parliament intends to pass legislation which, according to the US officials, would affect the fight against corruption and weaken the independence of the Romanian judiciary. The US Department of State believes that these laws, set forth by the Ministry of Justice, are a threat to the progress that Romania has made in the past years, in a bid to build strong judicial institutions, protected against political intervention. In the same statement, the US Department of State calls on the Romanian parliament to reject those proposals that weaken the rule of law and endanger the fight against corruption. In the latest CVM report, made public on November 15th, the European Commission states that the global pace of reform has stayed flat in 2017, and the challenges that the independence of the Romanian judiciary is faced with is a major reason for concern. On Sunday, street protests were staged in Bucharest and other cities across Romania, but also abroad, against the changes brought to the justice laws and the fiscal code.



    CONTRACTS– Contracts were signed on Tuesday in Bucharest for the building of a new gas pipeline as part of the EU-backed BRUA project, which will link the natural gas networks in Bulgaria, Romania, Hungary and Austria. The deputy prime minister Marcel Ciolacu said that BRUA was a priority for the government, being a very important project for Romanias energy security and independence. On Romanian soil, the pipeline will cover 529 kilometers and its conveyance capacity to Bulgaria will be 1.5 billion cubic meters per year and 4.4 billion cubic meters per year to Hungary. The cost of the project is 547.4 million dollars, of which 179 million have been allocated by the EU in the form of a grant to Romania.



    AGRICULTURE – The Romanian agriculture minister Petre Daea on Tuesday signed an agreement with the European Investment Fund, which provides for the implementation of a financial lending instrument under the 2014-2020 National Rural Development Program. The agreement will facilitate access to funding for farmers and entrepreneurs in the rural areas, more funds and smaller interest rates. The money allocated under this program amounts to almost 94 million euros. The European Investment Fund is an international financial institution, part of the European Investment Bank Group, specializing in risk funding for SMEs. The European Investment Fund supports the EUs objectives by boosting innovation, research and development, entrepreneurship and the creation of jobs.



    CENTRAL BANK – Romanias socio-economic development is slower than its economic growth, said on Tuesday the First Deputy Governor of the National Bank of Romania Florin Georgescu. According to him, the favorable macro-economic developments in the past years have been reflected only partially in an increase in peoples living standard and the countrys competitiveness. This has happened because the total capital in the economy is not at the right level and the business sector is faced with worrying structural vulnerabilities, the Central Bank First-Vice Governor also said.



    MIGRATION – Since the beginning of the year, at least 3000 migrants and refugees have died while attempting to cross the Mediterranean Sea in order to get to Europe, the International Organization for Migration announced on Tuesday. A record figure was reported last year, when some 5000 people died in similar circumstances. According to the IOM, since the beginning of 2017, some 165,000 migrants and refugees have reached Europe by sea, of which 75% arrived in Italy.



    IMF – The International Monetary Fund has appointed the South-Korean Jaewoo Lee chief of mission for Romania and Bulgaria. On December 7th he will replace the Pakistani Reza Baqir. Before this appointment, Jaewoo Lee was head of the IMF mission for Sri Lanka. Currently, Romania has no agreement with the IMF, just regular consultations with its representatives.



    ENERGY CONFERENCE – Turkmenistans capital, Ashgabat, is hosting these days the 28th session of the Energy Charter Conference. The event has gathered leaders and representatives of the energy ministries of the member and observer states and of several regional and international organizations. In 2018, Romania will take over from Turkmenistan the presidency of the Energy Charter Conference, and Mihnea Constantinescu, Special Ambassador and Representative for Energy Security with the Foreign Affairs Ministry, will chair the conference. The Energy Charter was launched in Europe in 1990 as a political initiative. It is a platform of cooperation in the energy field, accepted by both the Eurasian states and the developed countries. In 1991, the European Energy Charter was signed in The Hague, and in 1994 the Energy Charter Treaty and the Energy Charter Protocol relating to energy efficiency and environmental issues were signed in Lisbon. Romania ratified the two documents in 1997. (translation by Mihaela Ignatescu)




  • Agreement with International Lenders

    The Government of Romania has agreed on the main elements of the 2015 state budget with the IMF, European Commission and World Bank negotiators. The budget will be based on a 2.5% economic growth forecast and a budget deficit of 1.83% of the GDP, PM Victor Ponta announced. He made a point of alleviating all fears regarding possible increases of taxes and duties or the elimination of the current or planned social and economic measures. Victor Ponta:



    “First of all, there will not be, and the budget bill does not include, any additional taxes or charges in 2015. Obviously the flat 16% tax remains in force. The charge on special construction projects will be lowered from 1.5% to 1% and this has been taken into account in calculating the state budget. It was a fundamental objective. All the current measures targeting economic development or social justice are covered by the draft budget.”



    Such measures, the PM explained, include the 5% reduction of social security payments incurred by employers, the tax exemption for reinvested profits, the rise in pension benefits and in minimum guaranteed incomes, doubling the child support benefits for low-income families and the 16% increase of allowances for people with disabilities. PM Victor Ponta said there will be no major pressures on public expenditure, and that funds have been earmarked for co-funding European projects. The Opposition however believes these funds will be cut and therefore investments will be affected. Here is the Liberal Deputy Gheorghe Ialomitianu:



    “The bad thing is that we will have a state budget designed not for economic development, but for subsistence, because the increase in expenses operated by the Ponta Cabinet and included in the 2015 budget are not channeled into investments. Investments have been slashed, and the most affected are the investments from the state budget.”



    The representatives of Romania’s international lenders have left Bucharest, but issued a brief news release announcing that an agreement in principle was reached on the main points of the 2015 budget. They said the agreed deficit level is in line with the medium-term budgetary goal, while at the same time ensuring the framework for speeding up the European fund absorption. Delegations of the International Monetary Fund, European Commission and World Bank will return in January for a full assessment of the ongoing agreement. The Government intends to present the state budget bill in Parliament on Friday, with Parliament’s final vote on the draft law scheduled for December the 21st.