“The instability lowers Romania’s credibility significantly. We have the IMF visiting, and have made great efforts for this review of the agreement with the Fund to be carried out. First of all, we must see whether Romania has met its obligations in the first three quarters, so the loan tranches can be released for December. At the same time, a revision of the agreement must be made for 2010, because the Board meets on 15 December, when revisions of the agreement can be approved. Clearly certain adjustments must be made, because Romania will not be able to meet all its obligations by 31 December,” Basescu said, quoted by the NewsIn agency.
One of the essential conditions – a budget deficit of up to 5.4 percent of gross domestic product (GDP) after the first nine months of this year – was met. The public deficit amounted to 5.1 percent of GDP after the first three quarters, but analysts are insisting on the immediate future, when the deficit could widen significantly.
ING financial group analysts said that the political instability raises the risk that Romania’s GDP register a new quarter-on-quarter drop in the final three months of this year. “The risk is increasing, considering that there is little chance for a quick end to the political crisis. This means that the GDP decline for the whole of 2009 could exceed 7.5 percent,” the report indicates.
