IMF: Another year of negative GDP growth in Romania

The International Monetary Fund (IMF) has revised its economic growth projections for Romania from 1.3% to zero or even below, to -0.5%, but said it expects the economy to recover by yearend, IMF mission chief, Jeffrey Franks said Monday.

“The Government has committed to narrow the fiscal deficit to 6.8% of GDP in 2010, but if it fails to take the necessary measures, the deficit is at risk of widening to 9.1% and would be unsustainable”, said Franks.

He added that “apart from the severe decline in Gross Domestic Product, Romania is facing serious problems in tax collection and although first-quarter expenses came in below the agreed target, it was clear that pressures would have increased by the end of the year”.

Franks added that the Government announced an ambitious plan of drastic cut in current expenses.

“We didn’t impose these measures. It was proposed by the Government and we agreed”, said the iMF mission chief.

The International Monetary Fund and European Union have agreed on a widening of the budget gap to 6.8% budget deficit from 5.9%.

“Our efforts go into the adjustment of the economy, in order to avoid a double-dip recession. We expect the economic situation to improve for the remainder of the year”, said Franks.

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