Press notice of the International Monetary Fund Office of the Residend Representative in Romania
07.02.2006
The IMF mission that visited Romania from January 24 to February 7, 2006 held discussions on the annual Article IV report on macroeconomic and financial developments. The report will be discussed by the IMF Executive Board at the end of April. While confidence in Romania’s prospects remains high, the country continues to face many challenges. Growth has slowed, inflation remains in the 8-9 percent range, and the current account deficit continues to widen. The flat tax cut and substantial credit growth, together with large increases in public sector wages, has fueled demand pressures. At the same time, with EU accession approaching there is a unique opportunity to put in place policies that will allow Romania to take full advantage of the opportunities of the large increase in financial resources that will become available, and put a rapid improvement in living standards within reach.
The mission is encouraged that understandings have been reached with the authorities on the key macroeconomic objectives for 2006 and 2007, and now these intentions will have to be backed by strong policy actions. The mission believes that from a macroeconomic and structural perspective, the following requirements stand out: achieving a significant disinflation, permanently strengthening the fiscal position through revenue measures to raise the resources needed for EU accession and infrastructure improvements, narrowing the current account deficit, improving the business environment, and ensuring the capacity for effective utilization of EU funds.
The IMF mission understands that the authorities are to publish shortly the concluding Article IV mission statement in line with normal practices.
IMF Resident Representative Office