Government "will respects commitments undertaken to the IMF"
Government spokesman said Ungureanu cabinet ministers have endorsed the targets of the Letter of Intent with the IMF and try to clarify their objectives with the IMF officials
Articol de Sergiu Şteţ, 23 Februarie 2012, 07:23
Head of IMF mission to Romania, Jeffrey Franks, met on Wednesday with representatives of the new government.
Official talks aimed at Romania's economic situation and international context.
Ungureanu government announced it would respect commitments of the previous cabinet in talks with the IMF.
Under the preventive agreement concluded with the IMF, Romania's budget this year will be to record a deficit of more than 1.9% of GDP.
IMF official talks are scheduled in April, but unofficially the current government is to discuss problems they may encounter Romania's economy by then.
"Ministers have endorsed the goals of the Letter of Intent with the IMF and trying to clarify all these goals with officials of the Fund.
"We have new ministers, that currently have to negotiate and carry out the letter of intent and its objectives," said government spokesman, Dan Suciu.
Government needs to get more money
Calculations that was built this year's budget based on a prognosis of economic growth of 2.1% of GDP.
Romania’s economy may still suffer from the problems faced by other European economies.
Earlier this month, the IMF reduced its prognosis for Romania's economic growth this year to 1.5-2% of GDP.
Even in an optimistic scenario of IMF prognosis for Romania the economic growth of 2% would be below the increase that was built on budget.
There are even more pessimistic prognosis , such as the European Bank for Reconstruction and Development.
EBRD reduced its prognosis for Romania to 1.1% of GDP.
Decreased growth expected this year would reduce government revenues.
Every percentage point less to economic growth translates into a reduction in budget revenues by about 400 million Euros.
In such circumstances, Romania would be forced to cut spending or increase the budget deficit, the difference between revenues and expenses.
By increasing the budget deficit, Romania would not meet the commitment in this regard but the preventive agreement with the IMF.
Another solution would be to increase the collection of revenues.
Recently, Prime Minister Mihai Răzvan Ungureanu called on the authorities reducing tax evasion by approximately 1.5% of GDP.
Construction budget also based on an assumption has quite difficult: to attract six billion this year from the European Agriculture Funds and Cohesion Funds, too.
