Abstract | Keywords | Export | Availability | Bookmark

Choose an application

• Reference Manager
• EndNote
• RefWorks (Direct export to RefWorks)

KEY ISSUES Background: Romania has in large part reduced internal and external imbalances through sound macroeconomic policies. However, income convergence with the EU has been slow and weak public infrastructure has emerged as a bottleneck for faster growth. At the same time, Romania remains vulnerable to external shocks and the repair of balance sheets is not yet complete. Policy recommendations: Going forward, sustainable macroeconomic policies need to be combined with measures that boost the efficiency of public spending, reinvigorate delayed state-owned enterprise (SOE) reforms, and resolve crisis legacies in the financial sector. • Fiscal policy. Maintain the fiscal adjustment achievements, put public debt on a firm downward path, ensure provision of higher quality public infrastructure, and improve revenue administration and public expenditure management including through higher absorption of EU funds. • Monetary policy. Keep the easing bias as inflation has fallen below the target band and support a private credit rebound. Improve the policy framework by gradually moving to full-fledged inflation targeting. • Financial sector. Maintain the intense watch on the banking system focused on asset quality and non-performing loans reduction, further strengthen non-bank supervision, develop capital markets, and create effective insolvency frameworks. • Structural reforms. Improve financial performance and generate resources for investment of SOEs by implementing good governance principles, restructuring and increased private ownership; further deregulate energy markets. Outlook and risks: Staff expects sustained growth supported by strong domestic demand. Better EU funds absorption could boost the growth potential by about ½ percent annually. However, increased volatility in the external environment and failure to implement a much needed infrastructure upgrade present downside risks.

Aggregate Factor Income Distribution --- Banking --- Banks and Banking --- Banks and banking --- Banks --- Debt Management --- Debt --- Debts, Public --- Deflation --- Depository Institutions --- Finance --- Finance: General --- Financial reporting, financial statements --- Financial services industry --- Fiscal Policy --- Fiscal policy --- Fiscal stance --- Income --- Inflation --- Macroeconomics --- Micro Finance Institutions --- Mortgages --- Price Level --- Public debt --- Public finance & taxation --- Public Finance --- Sovereign Debt --- Romania