“From a macroeconomic standpoint, Romania’s main domestic problem is the promotion of pro-cyclical fiscal policies, with tax cuts and public spending hikes, fueling the risk of imbalances that will need to be corrected in the future. The focus of these policies is the hike in pensions and salaries at an unsustainable rate,” analysts said at the association’s annual conference.
The added keeping the budget deficit within the 3% of GDP limit this year is not a real success, as public investments have hit a ten-year low and accelerated dividend collection from profitable state companies is a temporary measure that will hinder their development potential in the future.
Analysts said hikes in household incomes do not reflect a more productive economy and additional consumption generated by these hikes is mainly directed to imports, thus raising pressure for higher inflation and a weaker leu.