IMF evaluation: Economic decline of 1.9 pc in 2010

After more than one week worth of talks with Romanian authorities, negotiations and statements more or less encouraging, the joint delegation of the International Monetary Fund (IMF), the European Commission (EC) and the World Bank concluded its evaluation towards a likely third instalment under the stand-by loan agreement aimed at redressing Romania's financial situation. A first conclusion was that Romanian economy would decrease by 1.9 per cent this year on account of weak domestic demand and floods, in line with a recent estimate by Romanian Finance Minister Sebastian Vladescu. In 2011 however, the GDP is predicted to go up 1.5 per cent and beyond.

"As far as the EC is concerned, the conditions have been met for the release of the third tranche part of the agreement, given the deficit targets agreed will be reached," EC representative Laurent Moulin told a press conference yesterday. The EUR 1.15 bln instalment will be given in September. The EU granted the first batch, worth EUR 1.5 bln, in July 2009, and the second, EUR 1 bln, in March this year. The evaluation should be followed by the IMF Board of Directors putting up for approval in September the release of the sixth tranche, over EUR 900 M, of the loan.

In his turn, IMF representative Jeffrey Franks said economic growth will start in the second quarter of 2011 and carry on throughout the year. Franks also showed that some of the economic sectors, among which exports, began bouncing back as of this year. The IMF official specified that, though constructions and consumption are still very slow, they will rebound after fiscal adjustments will have made their effect felt.

Nine O'Clock