Jeffrey Franks: Romania economy’s contraction smaller than estimated

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Romania’s economy will suffer a 7 percent contraction in 2009, and its increase will count for 1.3 percent in 2010, on Thursday said Jeffrey Franks, chief of the International Monetary Fund (IMF) mission to Romania, in a press release.

The macroeconomic situation of Romania has improved as compared to the beginning of October, when the IMF, EC (European Commission) and WB (World Bank) evaluation mission visited Bucharest, the release adds.
We say now that in 2009, Romania’s economy will suffer a about 7 percent contraction (against 8 percent as it had been estimated in November – editor’s note), and the economic increase will attain 1.3 percent in 2010 (as compared to 0.5 percent, as estimated in November – editor’s note), Franks says.

According to the figures in the preliminary draft budget, the 7.3 percent of the GDP deficit target is achievable, depending on keeping under control the expenses made in the last weeks of 2009.
The IMF mission chief for Romania said that these performances are very encouraging, given the difficult context they were achieved in, both from the economic and political point of view.

The markets stayed stable, despite political uncertainty, and we don’t anticipate any kind of difficulties in financing the budget deficit in the following months. Jeffrey Franks declared that the IMF and the EC agreed with the Romanian Government, at a technical level, on the preliminary draft budget parameters on 2010.
In order to observe a 5.9 percent budget deficit of the GDP, measures were set regarding in particular the budget expenses, measures which represent 2.5 percent of the GDP. In order to make a progress, the budget should observe the agreed parameters.

It is important that in the following weeks the structural reforms under adoption, such as the pension system’s reform and the Tax responsibility Law, should be carried out.
A IMF, EC and WB joint mission to close the second evaluation, according to the Stand-By Agreement, could come to Bucharest in January, as soon as the new Government is installed and the Parliament approves the measures underway.

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