EBRD Lowers Romania’s 2010 Econ Growth Forecast To Zero From Previous 1.3%

The EBRD now expects zero economic growth for Romania this year and sees it at 3% in 2011.

The international financial institution said in a report Saturday Romania has vowed to take drastic measures to tighten its ballooning budget deficit, which will trigger a decline in internal demand.

Romanian authorities and the International Monetary Fund, which is leading a EUR20 billion rescue loan for the recession-hit eastern European EU member, now expect this year's economic growth at zero, after previous scenarios forecast a more optimistic 1.3%.

Romanian authorities announced drastic spending cuts and plan to fire 70,000 public workers this year. Romania is also set to slash public sector wages by 25% and pensions and social benefits by 15%.

Meanwhile, although the flat tax and VAT remain unchanged, the Government is working on legislation to tax food vouchers, capital gains and increase property taxes, in a bid to boost budget revenue and meet its deficit target of 6.8% of GDP agreed with the IMF.

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