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IMF responds to Romanian PM allegation of 'wrong' growth forecasts

The International Monetary Fund (IMF) on Wednesday responded to an allegation of making 'wrong' economic forecasts about Romania by saying its projections reflect data available at the time of making them, while the final results are often influenced by subsequent decisions, Romanian media reported, seenews.com informs.

Romania's prime minister Mihai Tudose said on Tuesday he held a meeting with IMF representatives in an attempt to prevent another 'wrong' economic forecast of the global lender. "With regard to questions about IMF forecasts, it is worth pointing out that they reflect information on data and policies announced at the time the forecasts are made.

The final results are influenced by policy decisions, which are often adopted at a later date", Agerpres news agency quoted the IMF representation in Bucharest as saying in a statement. The IMF added that the meeting was a courtesy visit following an invitation from the prime minister's office.

"We appreciate the opportunity of the meeting and the exchange of views on recent economic developments and prospects for the future. As always, we are available to continue this dialogue with authorities about healthy policies that promote sustainable economic growth," the IMF said, according to Agerpres.

On Tuesday, Tudose said he did not mean to criticize the IMF. "We did not call for IMF talks to ask for money, as the rumor has it, but to talk and see the exact figures, together with the finance ministry, as in October the IMF will make its year-end forecast for Romania," Tudose said in a televised statement aired by local station Digi 24.

"Given that their last two forecasts were wrong - Romania did not function as the IMF had said, but did a bit better - and to prevent a third mistake, we provided the official economic figures for them to use and rely on." "They are a huge organization and the world is interested in their forecasts, which in our case turned out to be incorrect the last couple of times. I did not accuse them of ill intent, but I told them to be a bit more careful," Tudose added.

In April, the IMF said that Romania's real GDP growth is projected to reach 4.2% in 2017 before it decelerates to 3.4% in 2018. The IMF's latest forecast for Romania's economic growth is more pessimistic than the government's projections. Romania's 2017 budget bill is built on projections of 5.2% economic growth and sets deficit equivalent to 2.99% of GDP, a target many find too ambitious.

In 2016, Romania's economy expanded by 4.8%.

In August, Fitch Ratings affirmed its projections that Romania will post economic growth of 5.1% this year but warned of risk of overheating. "Romania has posted another quarter of rapid economic growth, but pro-cyclical fiscal policy and rapid wage growth in 2017 have increased overheating risks," Fitch Ratings said.

Fitch forecasts that growth will slow down in 2018 and 2019 to 3.4% and 3.5% respectively, as policy stimulus eases. In June, the World Bank said it raised its forecast for Romania economic growth in 2017 to 4.4% from 3.7% projected in January.

In May, the European Commission lowered its projection for Romania’s economic expansion in 2017 to a real 4.3% from 4.4% forecast in February due to the fiscal easing measures of the social democratic government.   

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