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IMF recommends the Government a deficit target of 1.5 per cent in the medium run
The International Monetary Fund (IMF) recommended the Government to target a deficit target of 1.5 per cent in the medium run, in order to be able to maintain the public debt at a low level, Alejandro Hajdenberg, the IMF representative for Romania, told the investors attending an event organized by the Proprietatea Fund.
"Romania has recovered from the economic crisis and, yes, it is growing, even a lot, but this growth comes from consumption, which was fueled by the fiscal policies of the recent years and by the increases in wages and pensions. (...) There are some risks, one of which is the rapid growth of the fiscal deficit. This is not about its expansion, but about the structure of the budget. Which means that you have current expenses to the disadvantage of the Government's capital expenditures. If the public debt increases this year and in the next ones, then our recommendation for the Government is to maintain the deficit; instead of targeting a 2 per cent, to target a 1.5 deficit, in the medium run. This will help the public debt to stay low," said Hajdenberg.
He appreciated that the efforts made so far against corruption must continue.
"Romanian developed well, but the key is to make this growth sustainable. We see the growth of 3.5 per cent, in the medium term, in our projects. The key to growing faster and converge tot he EU life standards are the structural reforms and investments," showed the IMF representative at the "Analyst & Investor Days" event.
The IMF representative for Romania also spoke about the quality of the infrastructure, "which is very poor."