He explained that budget deficit could have passed eight percent of GDP at the end of 2009, but an agreement with the Romanian authorities was reached to make certain fiscal corrections that should counter a higher deficit.
Franks stressed the Bucharest authorities should take fiscal adjustment moves representing 0.8 percent of GDP, so that the budget gap may stand at 7.3 percent of GDP.
When negotiating the loan agreement with Romania in this March, the IMF experts anticipated a budget gap at 4.6 percent of GDP.
The chief of the IMF mission said he would propose the institution’s board of directors that the next two loan instalments directly go to financing the budget deficit.
However, the Public Finances Ministry will have to find and to access, in the foreign market, the remaining funding required to cover the larger budget deficit, the IMF official pointed out.
Franks added that the budget implementation will be also backed by the future instalments of the loans extended by the other partners – the European Union and the World Bank.
For 2010, he said, additional adjustment efforts worth 2 – 2.5 percent of GDP will be required so that the budget deficit stand at below six percent of GDP.