BUCHAREST (Romania), February 2 (SeeNews) – Romania needs to ensure steady progress against tax evasion and systemic corruption, as well as to make its regulatory system more predictable, The Heritage Foundation said on Friday.
Romania dropped 2 places in the 2018 Index of Economic Freedom published by the U.S.-based think-tank, ranking 37th with a score of 69.4 points from a maximum 100, The Heritage Foundation said on its website.
In Southeast Europe (SEE), Romania ranks second in the 2018 edition of the annual index after Macedonia, which is in 33rd place with a score of 71.3 points.
"By 2015, after macroeconomic stability had been restored in Romania, the government yielded to political pressure to relax fiscal policy, raise the minimum wage, and delay additional structural reforms. Efforts to privatize state-owned enterprises have stalled, and progress on improving the business environment has been uneven," the foundation said.
However, significant tax evasion further jeopardizes the fiscal deficit and public debt burden, and foreign investors find the unpredictable regulatory system discouraging.
"Corruption is endemic at all levels of government and undermines the rule of law," the think-tank said.
The Economic Freedom Index covers 12 freedoms – from property rights to entrepreneurship – in 186 countries, through 12 quantitative and qualitative factors, grouped into four broad categories: Rule of law, Government size, Regulatory efficiency and Open markets.
In terms of the rule of law, the foundation notes Romania’s poorly resourced courts suffer from chronic corruption and political influence.
Regarding regulatory efficiency, Romania lags significantly behind that of other countries in the region, as labor regulations remain rigid.
In general, Romania's government policies do not significantly impede foreign investment and the evolving financial sector is open to competition, according to the report.