Romania made important progress in addressing economic imbalances in recent years. Prudent policies, partly in the context of successive Fund-supported programs, reduced vulnerabilities, and the fiscal and current account deficits improved markedly. However, economic policies have weakened recently and hard-won gains are at risk. Fiscal policy is pro-cyclical and the fiscal deficit is projected to increase substantially in 2016 and remain high in 2017, putting public debt on a gradually rising trajectory. Progress on structural reforms has slowed. Some recently passed measures, and others under consideration in parliament, could threaten property rights and damage the financial sector. [...]