Press Release No. 09/392

Press Release No.09/392
November 6, 2009

An International Monetary Fund (IMF) mission, led by Jeffrey Franks, visited Romania during October 28-November 6, 2009 to initiate discussions with the country’s authorities on the second review of the Stand-By Arrangement (SBA). At the conclusion of the visit, Mr. Franks made the following statement:

“Staff teams from the IMF, the European Union, and the World Bank have been assessing performance and prospects under the €20 billion multilateral support package for Romania. The third tranche of support from the SBA, of about €1.5 billion, is contingent upon satisfactory completion of this review.

“Performance under the program through end-September has been good. Nearly all program targets have been met, including those on the fiscal deficit and international reserves of the National Bank of Romania (NBR). We have reached broad agreement with the NBR on monetary policy and financial sector objectives for 2010. We have also moved ahead with the government in refining proposals for future structural reforms, including for a Fiscal Responsibility Law and Pension Reform, though additional work will be needed.

“Despite good progress, in the current political environment crucial components of the policy package cannot yet be implemented. Most important, the interim government cannot legally submit the 2010 budget to parliament, nor can it undertake the actions needed to trim the 2010 deficit to the 5.9 percent of GDP deficit target. The Fiscal Responsibility Law and Pension Reform cannot yet be agreed and approved by parliament. Discussions with leaders of the main political parties suggest that there is broad agreement on the fiscal target for 2010, although differences of views remain about how to achieve this target.

“Under these circumstances, discussions will continue in the coming weeks and another mission will return to Bucharest as soon as a new Government is in place. In view of the progress achieved to date and the broad consensus about how to move forward, the mission expects that it should be possible to bring the review to a swift completion.”