“Macroeconomic outlook on Romania are better than we expected early November, due to a stronger external demand. We expect the economy to contract 7% this year and to return in the positive territory next year, at an annual growth rate of 1.3%”, said Franks in a release of the institution.

The caretaker Minister of Finance, Gheorghe Pogea said the government and International Monetary Fund have updated their budget and economic forecasts, lifting growth projections from 0.5% to 1.3% to 538.9 billion lei.

The head of IMF mission stressed that the preliminary data on budget suggest that the 7.3% deficit target could be met, if the government keeps public spending under tight control for the remainder of the year.

“This performance is very encouraging, given the political deadlock and difficult economic conditions. Markets have stabilized, despite the recent political uncertainties, and we don’t expect any major problem in closing the budget deficit over the next few months”, Franks added.

The IMF, European Commission and the Romanian government have agreed on the content of the budget draft in 2010.