IMF: A credible budget for Romania should come first

The top priority of Romania's Government must be a credible budget, and not the possibility of an external loan, according to the Representative of the International Monetary Fund (IMF) in Romania and Bulgaria, Juan Fernandez-Ansola.

He told Business Standard that the budget for 2009 must be carefully drafted, especially the chapters related to public spending. In this field, Romania must increase resources for capital expenditures and investments. He advised that the government "look carefully at the full expenditure side of the budget, and determine what are the priorities, with a view to supporting sustainable economic growth."

Furthermore, if a loan from the IMF is needed, a credible budget would be the most important requirement coming from the fund.

"The financing constraint is very tight, but fiscal policy needs to contain its contribution to an economic slowdown that is already underway because of private sector retrenchment," Ansola said. However, he declined to specify the possible amount of a loan from the International Monetary Fund. "It would be premature to talk about this issue because Romania has not asked for a loan from the IMF," he said. Ansola stressed that the fund "is in constant dialog with the Romanian authorities, but that it has not specifically discussed an IMF loan."

Currently, Romania "is facing a significant economic slowdown and some questions about policies going forward. I would recommend to have a credible program that restores confidence," the IMF representative told Business Standard.

Business Standard