Romania: Selected Issues

Author: International Monetary Fund. European Dept.

Volume/Issue: Volume 2015 Issue 080

Publication date: March 2015

ISBN: 9781475553116

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Topics covered in this book

This title contains information about the following subjects. Click on a subject if you would like to see other titles with the same subjects.

Exports and Imports , Labor , Public Finance , Taxation - General , ISCR , CR , Romania , exchange rate , export , exchange rate pass-through , tax wedge , PPI inflation , targeting CEE , quality investment , Exchange rates , Labor taxes , Public investment and public-private partnerships (PPP) , Public investment spending , Global , Eastern Europe , Southern Europe , Central Asia

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Summary

This Selected Issues paper discusses benefits of boosting quality public infrastructure spending in Romania. Since the financial crisis, fiscal and current account deficits have been tackled, but the infrastructure deficit has widened. Quality public investment in infrastructure can boost domestic demand and potential GDP growth, particularly in low growth environments. The IMF staff simulations employing the European Union’s production function methodology show significant growth benefits from higher quality infrastructure spending. As a result of higher investment, real GDP would increase by about 1 percent initially with the impact peaking in 2025.