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IMF says political tensions could lead to dampening confidence in Romania

In a recent country report by the International Monetary Fund, political tensions and inflation are mentioned as risks that could hinder the Romanian economy.

The report, posted on the IMF web site as a comprehensive package of official documents that also includes a supplement on the assessments of the risks to the IMF and its liquidity position, says '... domestic political tensions could lead to policy reversals, dampening confidence, and weakening performance; a weaker-than expected recovery in Western Europe or spillovers from the ongoing turbulence in the euro area periphery could dampen exports or raise risk premia and affect capital flows to Romania.' 'Growth and balance of payments risks are largely balanced, but inflation risks are tilted to the upside,' reads the report.

The IMF experts say 'prospects of reaching the inflation target could be adversely affected by a continued resurgence in world food and energy prices, while needed increases in administered prices may also boost inflation.'

The National Bank of Romania, which governor Mugur Isarescu is a signatory of the letter of intent included in the report, says it remains committed to bringing inflationdown to within the official target band of 3 percent +/-1 percentage points in 2011 and2012. An inflation consultation clause to be included in the Technical Memorandum of Understanding will spell out that the Romanian authorities will confer with IMF staff if the targets for annual rises in the consumer price index are overshot, so that inflation may be brought down within the agreed limits. End-March 2011 inflation target is set at 7 percent +/-1 percentage, which would be further decreased to 6.8 percent in June, 4.2 percent in September and 3.7 percent in December 2011.

For the purpose of the programme, the exchange rate of the Romanian Leu (RON) against the euro is set at RON 4.28478 to the euro. (Please find Country's Policy Intentions Documents -- Romania: Letter of Intent, and Technical Memorandum of Understanding, March 10, 2011 : http://www.imf.org/External/NP/LOI/2011/ROU/031011.pdf)

Sursa: http://www.actmedia.eu

Tags: inflation percent political romania could tensions euro

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