Economy "Dr. Doom": Romania appears back on track in IMF relationship, but political risks persist

In a post on his blog quoted by Forbes, Nouriel Roubini indicates that political risks in Romania might persist. Nicknamed „Dr. Doom”, economist Nouriel Roubini, the man who predicted a global financial crisis one year before it happened, analysed the economic circumstances from Island, Latvia, Ukraine and Romania, countries with high economic vulnerabilities.

Writing about Romania, Roubini notes that „Romania’s US$26.4 billion E.U. and IMF-led loan program ($17.1 billion of which is being contributed by the IMF) appears back on track after a bout of political volatility in late 2009 threatened to derail the program. Nevertheless, it would be premature to signal the all-clear. The country’s recent elections are over, the political storm has calmed and the IMF program appears back on track. But political risk lingers.

The government holds a very slim majority in parliament and the governing coalition is made up of a disparate group of parties and independents, meaning its support is very fragile. So while political turmoil may have eased in the near term, this is unlikely to last. Loan tranches are scheduled for quarterly disbursements through March 15, 2011, and a new flare-up of political turbulence could delay or halt future loan disbursements.”