Romania catching up, says EBRD

Of all the countries in the former Soviet Bloc, the new EU members have made the most progress in terms of implementing reform, and Romania, Bulgaria and Croatia are catching up, according to the latest EBRD report on transition in Eastern Europe, Transition 2004. Analysts from the bank say 13 countries in the region saw improvements to their telecommunications, energy, transport and drinking water supply systems this year, with Romania, Bulgaria, and Croatia, together with Kyrgyzstan and Russia, having made the fastest progress in the entire region. As to Romania, EBRD analysts say the main risk that could affect macroeconomic stability in the medium term comes from the possibility of a relaxation of fiscal and revenue policies in the run-up to the general elections. “The intention of the current Government to cut taxes in 2005 may threaten fiscal consolidation if the relaxation is not accompanied by a reduction in subsidies and arrears,” the EBRD report warns. ZF