Romania’s New Govt Needs To Be Formed Quickly - Econ Analysts

The new Romanian government has to be formed as soon as possible to eliminate some of the uncertainty, and it needs a solid majority into the Parliament, so that "less pleasant" actions to be taken in the “very tough times” to follow, economic analysts said Monday.

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“We need a very strong Government very soon. A Government with a strong majority in the Parliament is important, because there are tough times ahead,” Raiffeisen Bank Romania's chief economist Ionut Dumitru told MEDIAFAX.

He added the structure of the Government should be set by the end of this week.

“Regrdless of the parties (to form the next Government - e.n.), the measures that will be taken are important. A coalition with a solid majority in the Parliament is necessary, so that the Government can take less pleasant measures in difficult conditions,” BCR's chief economist Lucian Anghel said.

Anghel hopes that by the end of the year the new government is already formed, in order to adopt the first actions, as foreign investors will follow Romania's evolution.

Laurian Lungu, associate professor at Cardiff Business School and research director at the Applied Economy Group, GEA, thinks that no matter the new government's structure, the individual programs of the parties will be modified and it is unknown where they will get the needed financing.

In that case, he thinks the new government should find the necessary funds for the anti-crisis plan.

Lungu added that “nobody likes uncertainties”, but said that the hurry to form the new government should not affect its stability.

"Speed is important. Uncertainty fuels speculations and market volatility could become very high," Dumitru also said.

Regarding the measures to be taken in the given circumstances, analysts see the need of a higher attention on the budget.

“The government has to take highly restrictive measures on the budget, the revenues and fiscal policy. The budget deficit has to be reduces and tax increases should not be excluded,” Dumitru said.

He added the budget deficit will “slightly overpass 4%-5%” given the current budget construction for 2009.

BCR’s chief economist thinks that the new measures of the government should be presented to foreign investors, as Romania still depend on their funds.

“Any control of costs and any attempt to increase revenues would be a very strong signal to foreign investors,” Anghel said.

Lungu said that authorities should forecast the budget deficit and the foreign debt on “less optimistic” economic scenarios, too.

In GEA's director's opinion, forecasts should be based on economic growth rates of 2%, 4% and 6%, as uncertainty is quite high.

“The programs should be based on these scenarios. If we do not have this predictions, the economic stability might be affected,” Lungu said.

The first uninominal elections in Romania took place on Sunday, November 30.

Romania’s alliance between social democrats and conservatives (PSD+PC) obtained 33% of voters’ preferences for the Chamber of Deputies, followed by the Democratic Liberal Party with 32.57% and liberals with 18.32%, following the counting of votes in 92.73% of polling stations countrywide by GMT 1200.

PSD+PC got 33.99% of voters’ preferences for the Senate, followed by the Democratic Liberal Party with 33.79% and liberals with 18.49%.

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