Romanian Econ Status, “Neither Very Good Nor Very Bad” – WB

“The short-term external debt is high enough compared with the central bank’s foreign currency reserves. (…) Romania’s position is a medium one, neither very good nor very bad,” World Bank chief economist for Europe and Central Asia, Indermit Gill, said Friday.

The speed at which Romania would recover from the economic crisis depends on the authorities’ measures, World Bank analysts said.

The senior economist of the World Bank’s Romanian office, Catalin Pauna, sees several strengths and weaknesses for Romania, adding that all the states in the region will be affected by the economic crisis.

“Among the plusses, we can mention the low public debt, and a certain flexibility of the markets," Pauna said.

Pauna sees Romania’s large exposure to euro zone’s economy and the country’s economic boost financed by high foreign capital inflows, which in the current context might diminish, as the country’s negative aspects.

As regards Romania’s financing needs, Gill said that the ratio between the financing gap and the foreign currency reserves should be under 0.75% and that Romania ranks slightly above this level.

World Bank analysts also said that pressures on budget deficits in the new EU member states will rise in 2009 compared with 2008.

“The new Romanian Government has just approved and submitted to the Parliament a budget deficit of 2% of GDP for 2009, which would represent a major improvement from the forecast,” a report of the World Bank’s reads.

The World Bank published Friday its EU10 Regular Economic Report which analyses Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Poland, Romania, Slovakia and Slovenia.