Florian Libocor, BRD: Romania should go through with the IMF agreementUpdated: 02-03-2010 | Financial and Banking

Romania should go through with the International Monetary Fund agreement, even there are voices saying that Romania could give up the other instalments from the foreign loan, BRD economist chief Florian Libocor. He mentioned that this is a proof that "we are serious". "There are voices saying that we could give up the other instalments from the IMF agreement, which are not that consistent. I believe it would be beneficial to go through with the agreement because it would be for the second time when we do it", BRD chief economist declared.

He added that "this would be good for the CV, because it would mean that we are serious." So far, the IMF paid Romania 9.32 million euros out of 12.95 million euros financial package. The man to suggest Romania could make a switch from a stand-by agreement to a precautionary agreement with the IMF was the Romanian Finance minister himself, Sebastian Vladescu. He stated that the Romanian economy was recovering in a consistent manner.

Asked whether summer 2010 might bring a precautionary agreement with the IMF, Vladescu replied: "It is to early to say whether we will change the agreement after the next evaluation. We hope to be able to switch to a precautionary agreement, because this would mean that the global economy is recovering and that the Romanian economy has recovered."A "precautionary stand-by" agreement is different from a stand-by agreement in that it doesn't need to use all the money available through the contract, unless there is an emergency situation.

A 1.5% GDP Growth In 2010 Seen Healthy For Romania

An economic growth of around 1.5% in 2010 would be a healthy recovery for Romania after last year's steep correction, officials of Romania's second largest lender BRD-Societe Generale said Friday.
"I am aware of the forecasts for a growth of 2%-3%, maybe even 4%. I'd settle even for an increase of 1%-1.5% in 2010, as it would indicate a recovery and a health growth," said Florian Libocor, chief economist at BRD.

Libocor said Romania will lag behind European Union states for a good part of the year, but it will end 2010 with a double growth compared with EU average, which is estimated at 0.7%.Romania's industry is forecast to grow by 1% year-on-year in 2010, while trading activities are seen rising 2%. However, the construction sector is likely to fall 5% on the year, according to BRD officials.

Local demand is seen picking up 2.3% on the year.For 2011, BRD expects the economy to grow by 3% on the year, with all major sectors poised to recover.

Political stability, the continued International Monetary Fund and EU funding, as well as rising exports and the adjustment of Romania's current account deficit are key factors pointing toward economic growth in 2010, BRD said.On the other hand, downward pressure may arise from a growing insolvency, shortage on the labor market, insufficient EU fund absorption and the underground economy.The Romanian authorities forecast an economic growth of 1.3% in 2010, from a 7.2% decline a year earlier.