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A year of instability

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What should have been a year of vibrant business expansion and investment has turned out to be a bit of a disappointment, with the entire business community having to grapple with fiscal and legislative instability. The ruling coalition seemed all too eager to announce legislative changes before a thorough impact assessments, only to go back on its plans soon after, generating a lot of uncertainty among businesses and investors.
What should have been a year of vibrant business expansion and investment has turned out to be a bit of a disappointment, with the entire business community having to grapple with fiscal and legislative instability.
The ruling coalition seemed all too eager to announce legislative changes before a thorough impact assessments, only to go back on its plans soon after, generating a lot of uncertainty among businesses and investors.
Moreover, when the tax overhaul was eventually approved, the government showed little inclination to take into account concerns that the changes would have to be implemented in too short a time frame. So, small wonder that the business community is a little apprehensive about what the new year may bring. 
In fact, the latest business sentiment index survey, conducted by Foreign Investors Council (FIC) among its members, reveals that business confidence is deteriorating considerably, especially on the predictability of the legislative framework and the stability of fiscal and regulatory frameworks.
To further complicate matters, the ruling coalition is also pressing ahead with a planned overhaul of the judiciary, which has generated widespread concern that the proposed changes might slow down the fight against corruption.
Meanwhile, the government has recently approved the draft 2018 state budget, which is based on a 5.5 percent GDP growth forecast. The inflation level taken into account stands at 3.1 percent, while the average exchange rate is estimated at an optimistic level of 4.55 lei/ euro. The cash budget deficit target is 2.97 percent, while the ESA deficit is forecast at 2.96 percent of GDP. Some 38.5 billion lei has been earmarked for investments, accounting for 4.2 percent of GDP, 11.5 billion lei up from 2017. At the same time, social security spending is planned to reach 98.6 billion lei, representing 10.9 percent of GDP.    
And while all businesses hope for some more stability in the new year, Business Arena will continue to keep an eye on all the issues affecting the business community, reflecting its views, hopes and challenges. For now, as the end of the year is near, we would like to thank our readers and business partners for their valuable support, and wish everyone a Happy Holiday season and a peaceful and prosperous New Year.

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