Romania’s Government may face difficulties in keeping the budget deficit below 3% of GDP over the coming three years, despite new taxes in the banking, energy and telecom sector and higher excise duties, according to a report released on Monday, January 28, by UniCredit Bank.

The pace of economic growth will slow down to 2% in 2020 (1% excluding the rise in inventory), while the risk of a technical recession is rising.

UniCredit expects the National Bank of Romania (BNR) to maintain its monetary policy interest rate at 2.5% in 2019-2020. The foreign exchange interventions might continue during 2019.

"Romania is facing a difficult end of the economic and electoral cycles," the authors of the report said.

But even under the scenario of excessive deficit procedures initiated in 2021 by the European Commission, Romania risks no sovereign downgrade by the rating agencies because the stock of public debt is low compared to that of similar rating countries, the bank’s analysts reasoned.

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editor@romania-insider.com

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