Wednesday, March 12, 2014

AFP: Romania forecasts steady 3.0% growth through 2016

Romanian Prime Minister Victor Ponta called on lawmakers on Tuesday to back his new left-wing government's programme, promising three-percent yearly growth until 2016, and improved use of EU funds.

"It is important that the steps we take towards spurring growth and fighting tax evasion lead to higher revenues for all, be it pensioners, civil servants or the private sector," Ponta told lawmakers.

Last year, the Romanian economy expanded by 3.5 percent, the highest rate in the 28-member European Union, while the public deficit was brought down to 2.5 percent of output.

The coalition government, in which Ponta's Social Democrats are the main component, pledged to respect a deal signed in July 2013 with the International Monetary Fund to introduce structural reforms aimed at making the economy more competitive.

The agreement on a 4.0-billion-euro ($5.5 billion) precautionary credit line, which the government intends to tap only in the case of a crisis, was the third accord signed with international lenders since 2009, when Romania obtained a 20-billion-euro bailout package in exchange for austerity measures.

Romania lags behind in the use of European Union funds aimed at helping it catch up with more advanced EU members.

The government promised to spend up to 80 percent of the 20 billion euros made available by the EU before the end of 2015.

This would mark a huge increase in the country's ability to use the funds. At the end of December, the absorbtion rate was barely 26.5 percent.

The government also pledged to crack down on tax evasion, hoping that this will enable it to reduce VAT sales tax on some food products from 24 percent to 9.0 percent.

Ponta's government won parliamentary approval last week after former allies of the National Liberal Party walked out over disagreements about cabinet appointments, eight months ahead of a presidential election.

The Liberals were replaced in the new coalition by the Democratic Union of Hungarians in Romania, which represents the roughly 1.4 million Hungarians in the country of 21.3 million people.

The previous coalition had been in power since December 2012 in the country, Europe's second-poorest nation after Bulgaria.

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