Romania's economy could brake fall, resume growth in Q3, finance minister deems

Publish date: 18-05-2009
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Romania's government considers a brake in the economic downward trend starting with the end of the second quarter and the beginning of the third quarter this year, when the economy is expected to go back up again, declared for NewsIn the country's Finance Minister, Gheorghe Pogea.

The minister said that an end to the effects of the economic crisis can be seen at a macroeconomic level in three, four or even five months, but there are already some positive signals in this direction.

"The exchange rate stabilized and this gives confidence, the slash in foreign direct investments was much smaller than expected and the volume of remittances from Romanians abroad remained at the level of the first quarter of 2008," explained Pogea.

Moreover, the auto industry saw a positive jump during March and April, the processing industry is showing signs of recovery, exports improved month-on-month and budget revenues in April hiked to 15.4 billion lei from 12.06 billion lei in March.

Romania has no reasons to ask the IMF to ease initially agreed fiscal conditions

There is no reason for Romania to ask the International Monetary Fund (IMF) to ease the fiscal conditions in the agreement or to modify macroeconomic indicators taken into account when inking the loan contract even if the Fund seems willing to do so, added Pogea.

Senior counselor in the IMF European department, Anne-Marie Gulde-Wolf declared on May 16 for Reuters that the Fund is ready to relax fiscal conditions convened in the lending programs with Romania, Latvia and Hungary, given the worsened economic conditions.

Romania clinched a deal with the IMF, the European Commission, the World Bank and other financial institutions over a 20 billion external loan to help restart engines behind the economy.

However, both the IMF and the EC condition granting the money by adopting certain fiscal and salary policies, after the budget deficit widened above 5 percent of the gross domestic product last year.

Romania's gross domestic product (GDP) compressed by 6.4 percent in the first three months of the year on the similar period in 2008, exceeding expectations by large, as the country pledged when contracting an external loan to keep the economy's fall below 4 percent in 2009.


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