Pauna, WB: Signing a new deal with IMF and EC is unlikely, especially before elections

It’s very unlikely for Romania to sign a new agreement with the International Monetary Fund (IMF) and the European Commission (EC) given the fact that elections are approaching, World Bank Country Economist Catalin Pauna said on Tuesday during a conference on fiscal issues.

“(…) Probably you do not want an IMF program that takes at least 18 months and that entails continuity. The more it comes after a program that has just ended and that had no review in 2015,” Pauna explained.

He noted that the World Bank is expecting Romania’s economy to grow by 3.6 percent in 2015 amidst this summer’s drought, but the growth of the Romanian economy in 2016 should reach 3.9 percent.

” (…) Inflation dynamics is mainly affected by tax measures, by this June’s cut of the Value-Added Tax (VAT) and we will have a new VAT decrease from 24 percent to 20 percent in January that will have an impact on inflation dynamics.

We forecast a jump in January 2017, when the effect of 2016 will be canceled. There will probably be a growth somewhere above the inflation average of 2.5 percent of the National Bank of Romania (BNR) target,” Pauna said.

Attending the event, Lucian Anghel, General Manager of BCR Pensii and Chairman of the Administration Board of the Bucharest Stock Exchange (BVB) said that the Fiscal Code will continue to stimulate consumption in 2016 and its effects will be felt in 2017 as well.

It is important to see how much imbalances, the trade deficit, will flame up,” said Anghel.

According to him, if in Romania the consumption would be based on products manufactured in the country, than the economic growth would have been much higher and the economy would have grown healthier.

a new agreementcut of the Value-Added Tax (VAT)economic growthFiscal CodeGeneral Manager of BCR Pensii and Chairman of the Administration Board of the Bucharest Stock Exchange (BVB)inflation dynamicsinflation targetInternational Monetary Fund (IMF)Lucian AnghelNational Bank of Romania (BNR)tax measuresthe European Commission (EC)to stimulate consumptiontrade deficitWorld Bank Country Economist Catalin Pauna
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