Directors of the International Monetary Fund (IMF) have warned the Romanian Government that the budget deficit could reach 3.7% of the GDP this year if they don’t take measures to reduce it.

The warning was formulated in a report the IMF presented yesterday.

“Directors have noted that the unitary wage law and the future tax cuts pose risks to the budget balance,” according to the document.

Setting a medium-term deficit target of 1.5% of GDP could help protect reserves and gradually reduce the public debt, the IMF representatives said. The IMF asked the Romanian authorities to resume structural reforms, especially the reform of state-owned companies and the appointment of professional managers.

Earlier this week, the European Commission has recommended Romania to adopt adjustment measures with an impact of 1.8% of GDP on the structural budget deficit, namely some RON 15 billion (EUR 3.3 billion), in order to comply with the obligations of the Stability and Growth Pact. The Commission estimates Romania’s budget deficit will reach 3.9% this year, and 4% next year.

editor@romania-insider.com