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European Commission Staff Statement after a joint mission with the IMF and the World Bank to Romania
A European Commission services’ mission reviewed the implementation of the ongoing balance-of-payments assistance to Romania and assessed the implementation of agreed measures for the release of the final instalment of EUR 150 million. The Commission services will report their findings to the Commissioner for Economic and Financial Affairs and the EU’s Economic and Financial Committee with a view to consulting it on the release of the final instalment.
A joint European Commission, IMF and World Bank mission visited Bucharest from 27 April to 9 May, 2011. European Commission services have assessed at technical level that Romania has met the conditions for the disbursement of the final instalment of EUR 150 million. Disbursement of this last instalment would bring the assistance paid out under the programme to EUR 5 billion.
According to recent macroeconomic developments, the economy is recovering as expected, with growth projected to reach 1½ % in 2011 and to further accelerate to about 3¾-4% in 2012. Inflation is, however, expected to remain higher than anticipated at above 5% in 2011. The Commission’s Spring 2011 Economic Forecast, including the detailed forecast for Romania, will be released on 13 May.
The cash target for budgetary execution in the first quarter was comfortably met, and developments indicate that budget execution will remain on track to respect the agreed deficit target for 2011 (4.4% of GDP on a cash basis; below 5% on ESA accruals basis). Public sector wage developments continue to respect the limits set out in the 2011 budget and in the medium-term fiscal strategy. While reforms in the healthcare sector are yielding savings which contribute to closing the gap between expenditures and revenues, on current trends, a shortfall would likely remain in 2011. Commission staff received the assurance that this matter will be addressed in the mid-year supplementary budget so as to prevent a re-emergence of arrears. Finally, Commission staff could ascertain that the ministry of transport’s investment plans, as set out in the multi-annual performance agreements between the ministry and the implementing agencies, are in line with the budgeted amounts in the government’s medium-term fiscal strategy. This will help to secure an orderly budget execution.
The mission will report its findings to the Commissioner for Economic and Financial Affairs and consult the Economic and Financial Committee. Subject to their agreement, the Commission will disburse the final instalment (EUR 150 million) of the EU loan to Romania.
The mission would like to thank the authorities for their excellent cooperation.