The political tensions have further eased through March, but the activity of Romania’s government is still hindered by hardly functional political majority. A conflict within the junior ruling party resulted in the replacement of the deputy-prime minister Daniel Constantin. Politically, Constantin was not a relevant part of the balance within the ruling coalition and his replacement in the government’s structure brings nothing new. But the development show the magnitude of the unrest within the ruling coalition, still led informally by the leader of the Social Democratic Party Liviu Dragnea.
Economically, the fiscal slippage remain the main concern. The government promised to keep the deficit within the 3% of GDP this year, but it goes ahead with a multitude of measures with significant impact on the gap. Eventually, it is not the size of the gap that matters, but the focus of the public spending on public wages,, pensions and social spending at the expense of investments. As a measure of last resort, the government squeezes the state-controlled companies as much as possible, through dividends (even paid in advance) and the recovery of reserves. Transgaz thus has to rely on bank loans for investments after having paid the profit derived last to shareholders (basically, to the state). More clarifications are expected after April 25, when Q1 data will be released and compared to the targets.
To Purchase This Report - Click
The Belarusian economy is doing a lot better this year than anyone thought it would do at the start of this year - largely thanks to Russia’s economic recovery.
The IMF revised its forecast ... more
Electioneering for the presidential vote in 2019 is in full swing now and increasingly affecting the political agenda, slowing reforms as the government is starting to put off the more painful ... more
Russian GDP grew in April-June by 2.5% y/y. According to fresh GDP figures, however, much of the growth came from a build-up in inventories, suggesting that growth is still on a rather fragile base. ... more