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IMF: 2010 - Another year of negative GDP growth in Romania

The International Monetary Fund (IMF) has revised its economic growth projections for Romania from 1.3% to zero or even below, to -0.5%, but said it expects the economy to recover by yearend, IMF mission chief, Jeffrey Franks said Monday.

.'The Government has committed to narrow the fiscal deficit to 6.8% of GDP in 2010, but if it fails to take the necessary measures, the deficit is at risk of widening to 9.1% and would be unsustainable', said Franks.He added that 'apart from the severe decline in Gross Domestic Product, Romania is facing serious problems in tax collection and although first-quarter expenses came in below the agreed target, it was clear that pressures would have increased by the end of the year'.

Franks added that the Government announced an ambitious plan of drastic cut in current expenses.

'We didn't impose these measures. It was proposed by the Government and we agreed', said the iMF mission chief.The International Monetary Fund and European Union have agreed on a widening of the budget gap to 6.8% budget deficit from 5.9%.'Our efforts go into the adjustment of the economy, in order to avoid a double-dip recession. We expect the economic situation to improve for the remainder of the year', said Franks.

Laws of reform must be adopted by September

The measures meant to cut budget expenditure must be adopted by June and the laws on the structural reform must be adopted by September for the deficit targets agreed on with the IMF, namely -6.8 percent for 2010 and -4.4 percent for 2011, to be achieved, said the members of the assessment mission of the IMF, the European Commission (EC) and the World Bank (WB) on Monday.

By September the pension law, the law on the unitary pay and the law on the local public finance will have to be adopted for the levels of expenditure in these fields to become sustainable and the pension and wage systems to be in keeping with the best European practices, said Jeffrey Franks, chief of the IMF mission to Romania.

The WB, which was on the assessment team, had meetings with the Romanian authorities and discussed the economic reform programme supported by the bank with a view to granting the second tranche of the Development Policy Loans (DPL2) programme. The loan programme covers three main fields: improvement of the efficiency of the public sector, protection of the vulnerable groups and the poor and consolidation of the functioning of the financial sector.

Francois Rantrua, head of the WB Romanian office in Bucharest, emphasized the fact, as did Jeffrey Franks too, that September was the deadline for adopting the laws on the structural reform.

As for the law on the unitary pay Swati Ghosh, WB chief economist for Europe and Central Asia, made it clear that the implementation of a new unitary pay system had made progress and a sample of positions in the public sector had already been examined under the supervision of a two-party wage system commission. It will be the basis of the project on implementing the laws on the single wage law, which is expected to be submitted to Parliament for debate in September.

The WB makes assessments with the Ministries of Labour, Transports, Finance, Education, Health and Agriculture. Together with the Ministry of Labour the bank makes sure of both the consolidation of the social assistance programmes for the poor and vulnerable people and of the fact that these programmes will be rationalized, well guided and that they will have the necessary funds, that the public resources will not be wasted and the losses in the social protection programmes will be cut, said the WB representatives.

In case the measures promised by the Romanian Government are taken, the second loan for Romania will be released in July. The first development policy loan, totalling 300 million euros, was approved by the WB board of directors on July 16, 2009, was signed on September 1, 2009 and was released on October 20, 2009.

Sursa: http://www.actmedia.eu

Tags: september franks romania

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