Maintaining the budgetary deficit below 3 percent of GDP could be a Sisyphean work for the government of technocrats, considering that the Parliament will continue to promote populist measures in the run up of local and general elections this year, Ciprian Dascalu, chief economist of ING Bank said on Monday.
Thus, the Executive could come up with initiatives such as the increase of public sector wages, the minimum wage growth, blocking reforms in public administration, education or health, delaying privatization, obstructing implementing the principles of a good corporate governance in state enterprises or the promoting some measures to support certain categories of debtors, Dascalu forecasts in “Romania 2.0” analysis, alluding to the fundamental change through which Romanian society could pass after the tragedy of the ‘Colectiv’ nightclub.
The main challenge for Ciolos Gov’t would be building a foundation for improving the potential economic growth so that 2016 do not become a “lost year”, ING Bank chief economist warns. Among the measures envisaged are: improving energy efficiency, stimulating the birth rate to combat the aging trend of the population and education reform.
ING Bank estimates that the Romanian leu will strengthen during this year and will end 2016 at a rate of RON 4.3 /euro, compared to RON 4.5 /euro on the interbank market on Monday morning, provided that the inflation will return to positive trend by mid-year. On the other hand, the U.S. dollar could reach parity with the euro in the second half of the year.
The economic growth forecasted by ING is above 4 percent this year, compared to 3.9 percent in 2015, while the annual inflation rate would reach 1.2 percent by end-2016. ING expects also the central bank will not operate changes in the monetary policy rate this year.