Romania needs a new Cabinet as quickly as possible, to fill the executive level void of the past two months, and this government must have a united vision on policies to be implemented, analysts said.
“It is important that Romania have a government with the political will to make the decisions necessary for economic recovery. For this to happen, the parties in the coalition must have common opinions and ensure solid parliamentary support for the executive. It is very encouraging that PSD and PNL, through their presidential candidates, have declared their support for maintaining the IMF [International Monetary Fund] agreement,” said Marion Mühlberger, Deutsche Bank analyst, in Frankfurt.
“The fact that we have two parties, one left wing and one right wing, does not mean that the government and the coalition that will support it will be affected by instability. Such coalitions have existed and exist in many countries, and they work very well when a national interest goal must be reached,” said Daniel Hewitt, Barclays Capital analyst in London.
Other analysts prefer to observe the political evolution in Bucharest before reaching a conclusion. “Having, if not a valid government, at least a coalition to support one is good news. This somewhat reduces the political uncertainty which arose in Romania. Of course, we have to wait for the second round of presidential elections,” said Alexandre Vincent, BNP Paribas analyst in Paris.
Maintaining control of the budget deficit is considered to be the number one priority of the future Romanian government. “Any government that comes into being must solve the budget problem. This is actually the main problem of the IMF agreement. The adjustments contained in the agreement must be applied,” said Neil Shearing, Capital Economics analyst, in London.
This is why maintaining taxes at their current level, given the present dynamics of the budget, one of the promises made during the election campaign, will be difficult to apply, analysts estimate.
“The budget deficit is the main brake for the recovery of the Romanian economy. Its narrowing is essential. I do not know how this will be done, but it must be done,” stressed Daniel Hewitt.