The divide of the Romanian government coalition increases the political uncertainty before an election year and due to the advance of the macroeconomic imbalances, which further reduces the probability, the magnitude and the nature of possible efforts aimed at keeping a growing budget deficit under control, reports the financial evaluation agency, Fitch Ratings, according to Agerpres.

According to Fitch, political uncertainty further complicates economic policy at a time when fiscal and external indicators have deteriorated. The budget deficit (in cash flows) in the first semester is of 1.8% of GDP, compared to 1.2% of GDP, respectively 0.6% of GDP, in the similar period of 2018 and 2017 respectively.

“In our opinion, the corrective measures from the budget rectification adopted by the Government at the beginning of August are insufficient to bring the deficit down to the target of 2.76% of GDP. We estimate that the deficit will be at 3.4% of GDP in 2019, from 3% of GDP last year, and we consider that the Government’s forecasts are based on optimistic revenue expectations”, stresses Fitch.

The agency stresses that the budget deficit and the current account deficit are the main weaknesses regarding the “BBB minus” sovereign rating with a stable outlook for Romania.