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Successful review of the IMF stand-by arrangement

Today, the head of the IMF mission and a team of experts from the EC and the World Bank presented the conclusions of the periodic review of the 24-month stand-by arrangement:

NBR will receive the next disbursement of EUR 0.9bn in January, after the decision of the IMF Board

− The adoption of the 2011 state budget, the pension law and the unified wage law in the public sector are key conditions that should be met by Romania before receiving the next tranche from IMF

− IMF is impressed by the commitment of the Romanian authorities to the fiscal consolidation program despite difficult social conditions and mentioned that the actual budget deficit was well below the target at the end of September

− Romania is on track to meet the budget deficit target of 6.8% of GDP in 2010

− Budget deficit (cash standards) should be cut further to 4.4% of GDP in 2011 and 3% of GDP in 2012

− IMF forecast for the economic growth is -2% in 2010 and +1.5% in 2011

− IMF sees negative q/q economic growth in 3Q10 and positive in 4Q10

− The IMF could discuss with the Romanian authorities an additional allocation of resources for investments in 1H11 but requires preliminary steps forward in this direction

− In spite of some progress, the performance indicator for the stock of domestic arrears was missed again in September and the government asked for a waiver

− The economic performance of the state-owned companies remains disappointing and the authorities should consider three alternatives: restructuring, privatisation or liquidation

− Final talks about another agreement will take place in January-February next year

Investor implications: a continuation of the agreement with the IMF is good news for the capital markets. We maintain our forecast regarding a slight appreciation of the RON to 4.15 next June.

Sursa: http://www.bcr.ro

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