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IMF asks Romania not to jeopardize progress made in past years
The International Monetary Fund asked Romania on Tuesday not to jeopardize the progress made in past year for keeping under control expenses, in case the government headed by Victor Ponta seems to put an end to the program with IMF next year.Guillermo Tolosa, the IMF representative in Romania and Bulgaria declared in Sofia that IMF expects Romania to continue consolidating the fiscal situation as stipulated by the engagement made by Romania.
He showed that a great effort had been made to strengthen Romania’s economy. Therefore the state of budget accounts is better today than it was 6 years before. In these conditions it is extremely important for Romania not to jeopardize this considerable progress, Tolosa added.
IMF backed Romania in 2009 when the country underwent a painful recession, by encouraging the drop of budget deficit and implementation of reform by a series of accords which rebuilt the country’s credibility in front of investors.
Ponta is expected to become president on Sunday and boasts to reduce austerity measures and some taxes and promises to increase pensions next year, Reuters informs.Such promises brought to attention the 2015 budget and the possibility that the new government might relax the fiscal policy, despite an engagement to maintain budget deficit at 1.4% of GDP.
Romania’s last accord with IMF, the third since 2009, is a stand-by agreement of 4 billion euros which ends next year and most likely will not be renewed. IMF suspended talks about the present accord until after elections. Present expectations shows that Romania will be able to conclude stand-by accords of the last 5-6 years, Tolosa added.
Romania has for 2014 a budget deficit target of 2.2%, a lot less than the 7.2% registered in 2009. Ponta signed in October the intention to maintain the deficit target of 1.4% for 2015, Reuters notes.
The European Commission warned on November 4 that the government would have to increase taxes or cut down expenses to compensate income drops foreseen in 2015 by reducing CAS and excises, otherwise the budget deficit will grow to 2.8% of GDP.