Changes

Romania's budget deficits also dropped under IMF guidance, though the trend is reversing. Actual deficits decreased from 4% of GDP in 1999 to only 0.8% in 2005 and 1.7% in 2006. However, the 2007 deficit is expected to approach 3%, driven by rising spending on infrastructure, public sector wages, and pension increases. In response the IMF has recommended that Romania strive to keep the 2007 deficit below 2%, dropping to 1% of GDP in 2008. The IMF also advises that Romania is lacking a realistic fiscal policy framework for the medium term. The country made progress in combating domestic tax arrears and expanding the tax base in 2005, though Romania has one of the lowest collection rates in Europe, at 31.0% of GDP in 2006.  

Romania's budget deficits also dropped under IMF guidance, though the trend is reversing. Actual deficits decreased from 4% of GDP in 1999 to only 0.8% in 2005 and 1.7% in 2006. However, the 2007 deficit is expected to approach 3%, driven by rising spending on infrastructure, public sector wages, and pension increases. In response the IMF has recommended that Romania strive to keep the 2007 deficit below 2%, dropping to 1% of GDP in 2008. The IMF also advises that Romania is lacking a realistic fiscal policy framework for the medium term. The country made progress in combating domestic tax arrears and expanding the tax base in 2005, though Romania has one of the lowest collection rates in Europe, at 31.0% of GDP in 2006.  

Unemployment was officially 3.9%in August 2007, although these figures do not capture high levels of temporary emigration, gray-market employment, or under-employment.  

Unemployment was officially 3.9% in August 2007, although these figures do not capture high levels of temporary emigration, gray-market employment, or under-employment.  

In the early 1990s, inflation was one of Romania's most serious economic problems. Inflation rates have gradually declined, finally reaching single digits in 2004. Inflation in 2006 stood at a historical low of 4.9%. The Central Bank has set an ambitious annual target band of 4% plus/minus 1% for 2007, but outside analysts note that inflationary pressures are growing and predict that the rate for the year will slightly exceed the top of this band.

In the early 1990s, inflation was one of Romania's most serious economic problems. Inflation rates have gradually declined, finally reaching single digits in 2004. Inflation in 2006 stood at a historical low of 4.9%. The Central Bank has set an ambitious annual target band of 4% plus/minus 1% for 2007, but outside analysts note that inflationary pressures are growing and predict that the rate for the year will slightly exceed the top of this band.