IMF Cuts Romania’s GDP Growth Forecast

Poor conditions on European markets have prompted the IMF to revise down its 2012 growth forecast for the Romanian economy.

The International Monetary Fund has cut Romania's GDP forecast for next year, with IMF mission chief Jeffrey Franks saying earlier predictions were too optimistic.

“The GDP forecast for next year will most certainly be reduced. It will definitely be smaller than 3.5 %... I think it will stick at somewhere around 2 %,” Franks said.

The same IMF official added that Romania needed to speed up reforms in order to counteract the risks that had accumulated over the past three months.

“It is not Romania’s fault, but the fault of external factors," Franks said, of the downward growth forecast. "For this reason it is especially important that the reform programme is maintained."

The managing board of the IMF last week approved the second evaluation of the new cautionary agreement and placed at Romania’s disposal a new installment of 480 million euro.

In May 2009, crisis-hit Romania obtained a two-year 20 billion euro emergency loan from the IMF, the EU and the World Bank in exchange for implementing key reforms aimed at reducing public spending. Last July the government cut civil servants' wages by 25 %, while thousands of state jobs were axed and VAT was increased by 5 % to 24 %.

The next IMF evaluation mission will take place later this month in Bucharest.