IMF expects Romanian economy to grow 2.7% in 2015

Sidex-Lakshmi Mittal plant, Galati. [Sludge G/Flickr]

The International Monetary Fund (IMF) expects the Romanian economy to grow 2.7% this year and 2.9% in 2016, fuelled mainly by private consumption. But weak public infrastructure was hindering higher growth, it said late on Monday (9 February).

Romania failed to reach an agreement with the IMF, the European Commission and the World Bank on its €4 billion euro aid deal – its third since 2009 – as Bucharest resisted calls for gas price hikes and restructuring state-run coal firms, Prime Minister Victor Ponta said.

“The Romanian economy has largely corrected … imbalances with a mix of sound macroeconomic policies. However, convergence has stalled and weak public infrastructure has emerged as a key bottleneck for a higher growth trajectory,” the IMF said in a statement. An IMF mission is expected to return in April.

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“Despite a history of capital spending above the average in peer countries, Romania’s infrastructure density is relatively low and quality is perceived to be the worst in the EU, reflecting wasteful spending and weak medium-term planning.”

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The Fund also said the relatively low share of Swiss franc loans made the franc’s appreciation manageable for the Romanian banking system, and encouraged “bilateral loan restructurings taking into account the repayment capacity of the borrower.”

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