IMF: Romania’s economy to grow 0.5-1 pct in 2010

The International Monetary Fund (IMF) expects the Romanian economy to grow between 0.5 and 1 percent in 2010, said on Monday Jeffrey Franks, the head of the IMF mission to Romania that, during the past 10 days, has been assessing the manner how the Romanian authorities achieved the objectives the Letter of Intent and the Stand-By Accord stipulated.

Franks said that the drop in the economy would reach the lowest point over the coming quarters, but he could not specify whether the minimum would be reached in 2009, given that the development of the economic circumstances is extremely unpredictable.

The IMF official added that if tough steps had not been taken in the banking system, during the years before, the banking system would not have been so strong now.

On the other hand, the parent banks of the nine main foreign banks working in Romania signed bilateral commitment letters confirming they would maintain their total exposure to Romania and would observe the capital demands for their subsidiaries, Franks stressed.
Last week, new steps were made in the implementation of the Bank Coordination Initiative for Romania.

The parent banks of the nine main foreign banks in Romania, namely Erste Group Bank, Raifeissen International, Eurobank EFG, National Bank of Greece, Societe Generale, Alpha Bank, Volksbank, Piraeus Bank and Unicredit Group holding about 70 percent of the Romanian market quota finalized and signed the bilateral letters based on the patterns agreed upon in Brussels, in May, with the objectives assumed Vienna, in March, International Monetary Fund (IMF) informed in a press release.

The macroeconomic reform programme’s success and the sustainability of the balance sheet’s equilibrium considerably depend on the active involvement of the foreign banks in Romania.

The programme can contribute to the macroeconomic stability, through price stability included, and the decrease in the risk bonus. Market competition circumstances will later lead to the drop in the assets, the IMF release points out.

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