Romania: IMF program adjusted to reflect poor growth
Overview:
The Romanian authorities have reached Staff-level agreement with the IMF on the completion of the fourth review of the Stand-By Arrangement (SBA). This means that, if the necessary prior actions are implemented, the Executive Board of the IMF will allow the disbursement of a EUR0.9 bn tranche in the next few weeks. The parameters of the SBA have had to be adjusted to reflect worse than expected economic growth in Romania and, therefore, a likely budget overshoot in 2010. Given that poor fiscal performance has been due to weak economic growth more than policy slippage, the IMF has agreed to loosen this year’s fiscal deficit target by 0.9% of GDP in return for further adjustment measures to improve the underlying structural fiscal balance. The authorities have, thus, announced some stringent extra budget cuts.