Press Release No. 09/463

Press Release No. 09/463
December 17, 2009

A small joint technical team from the International Monetary Fund (IMF) and the European Commission (EC) visited Bucharest from December 14 to 16 to continue work on the 2010 draft budget.

IMF mission chief Jeffrey Franks made the following statement at the end of the visit today:

“Romania’s macroeconomic outlook seems better than in early November due to stronger external demand. We now project that, in 2009, the drop in growth will be contained to about 7 percent, and that growth will become positive for 2010, to about 1.3 percent.

“Preliminary budget figures suggest that the 2009 budget deficit target of 7.3 percent of GDP is within reach, provided spending remains controlled in the final weeks of the year. This performance is particularly encouraging given the difficult political and economic environment. Markets have remained stable despite the recent political uncertainties, and we expect no undue difficulties in financing the fiscal deficit in the coming months.

“The IMF and the EC agreed with the government at the technical level on the content of the 2010 draft budget. To achieve a cash budget deficit of 5.9 percent of GDP, measures of 2.5 percentage points of GDP were agreed, mainly on the expenditure side. In order to move forward, the final budget will need to be consistent with the agreed parameters. It is also important that progress be made in the coming weeks on key pending structural reforms, such as the Pension Reform and the Fiscal Responsibility Law.

“A joint IMF, EC, and World Bank mission to conclude the second review under the IMF-supported Stand-By Arrangement (see Press Release No. 09/148) could take place in January, once a new government is in place and parliamentary action is forthcoming.

“Based on progress so far, we are optimistic that the staff can move the review quickly to the IMF Executive Board for a meeting by mid-February. Subject to the IMF Board’s favorable decision, disbursement can follow.”