Erste: Markets will give Romania's new government time, but lending cost may increase

The cost at which Romania borrows money from the financial markets may increase in the next months based on the fiscal policies of the next government, according Austrian financial group Erste’s analysts. The investors will give the new government time to come up with measures to prevent the excessive deepening of the deficit. “If the new government keeps the deficit under control next year, Romania’s financing needs will be much lower than in 2016, which should limit the rise in bond yields. Without fiscal tightening measures, there is an increased risk to exceed the deficit target next year,” according to the Erste analysts, reports local Profit.ro. Romania’s economic growth will slow down to 3.2% in 2017, from an advance of 4.5% expected for this year, as the effects of the previous fiscal policy will wane, but also due to the difficult external environment, the Erste analysis shows. After counting 99% of votes by the Central Electoral Bureau, the Social-Democratic Party PSD won the Chamber of Deputies with 45.90% of the votes. The National Liberal Party PNL came next, with 19.88% of the votes, and the Union to Save Romania (USR), with 8.49% of the votes. In the Senate, PSD recorded 46.09% of the votes, followed by PNL, with 20.26% of the votes and USR, with 8.55% of the votes. editor@romania-insider.com