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Romania needs to reduce its macro imbalances

Romania’s large twin budget and current account deficits remain a key concern. One near-term risk is that fiscal policy stays very loose (or is loosened further), particularly in view of elections taking place later this year. This could cause risk premia on public debt to rise further than we currently expect and require a sharper slowdown in demand to rein in the country’s macroeconomic imbalances.

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