IMF revises prognosis for Romania`s economic shrink to 8-8.5 percent at year-end, from 4.1 percent
The International Monetary Fund (IMF) revised prognosis for Romania's economic decrease this year to 8 – 8.5 percent, from 4.1 percent, which represents “a severe recession”, the head of the IMF mission Jeffrey Franks declared.
IMF also changed its inflation prognosis for the end of 2009 to 4.3 percent, in line with the central bank's estimates.
For the current account gap, the Fund slashed prognosis from 7.5 percent to 5.5 percent of the gross domestic product (GDP) in 2009.
The economic growth could step on the positive side in the next trimesters compared to the previous ones and Romania could report a modest economic advance in 2010, according to Franks.
He mentioned the data on the economic growth in the first quarter were worse than estimated, and that those for the second trimester will stand way below expectations.
IMF revised the budget deficit target agreed with the local authorities to 7.3 percent of the GDP at year-end, versus 4.6 percent initially, but underlined that the gap could widen towards 8 percent without the necessary fiscal measures.
Franks also declared Romania's budget gap should stand below 6 percent in 2010.
IMF could allot almost 1.75 billion euros from the next two installments within the financing agreement to cover Romania's budget deficit, according to Franks. However, the final decision belongs to the IMF board.
Romania should receive 1.9 billion euros from IMF on September 15 and 1.56 billion euros on December 15. The first installment worth 5 billion euros entered BNR's reserve in May.