The International Monetary Fund (IMF) is considering the possibility that Romania’s economy will drop in 2009. “We are working on alternative scenarios, because there are many unknowns. There is also this possibility [Ed. n. of recession], in which case a revision in spending will obviously be necessary,” Romania’s IMF representative, Mihai Tanasescu, told Business Standard. He added that the government’s version is also possible, and gross domestic product (GDP) could rise 2.5 percent. A press notice by IMF writes that, while growth remained high in the first three quarters of 2008, output indicators worsened rapidly in last year’s final months. Thus the fund expects weak economic activity, while “GDP growth may well turn negative in 2009.” Exports began to tumble, the availability of credit tightened for companies and households, and domestic consumption and investment are poised to fall.

Although the global crisis has been named as the main culprit for Romania’s current predicament, the “balance of payments and government deficits heightened vulnerability to external shocks, while slow action on structural reforms has left the economy less productive and flexible in terms of its ability to respond to the downturn.” Moreover, public spending policies have aggravated current economic difficulties, considering that government spending doubled in 2005-2008, and the public sector salary bill virtually tripled in those three years.