Romania is prepared to address short-term crisis danger, says Franks of the IMF

Newsroom 26/10/2011 | 17:51

Jeffrey Franks, head of the IMF mission in Romania, warned that nervous markets are looking for vulnerable countries that may slip into a crisis and that Romania has to be better prepared than other countries in the region. This statement was made during a conference on economic recovery and growth organized by the World Bank.

Franks highlighted the policies will have to pursue in order to avoid vulnerability; the key weakness points have to be found and eliminated, while large protective buffers have to established. Moreover, Romania should focus more on the long term to ensure good prospects.

The IMF representative believes that Romania is in a better situation compared to 2008 and is better prepared to address short term crisis situations. The current account deficit was reduced from 14 percent in 2011 to just 4 percent this year and the budgetary deficit will also reach 4.4 percent this year, with the intention of reducing it to 3 percent next year. The banking sector has taken addition precautionary measures, exceeding the minimum capital requirements of 8 percent from the National Bank by 6 percent on average.

Franks admitted that the growth prospects in Romania are worse than 6 months ago, because of the international context, but that Romania should expect an economic growth of 1.5 – 1.7 of GDP this year.

According to Andreea Paul Vass, the economic advisor of Prime-Minister Emil Boc, Romania has had 4 quarters of economic growth, and posted the highest export rate in its history last year, totaling EUR 37.3 billion. On the CDS market, Romania has 377bp (base points), faring better than other debt-ridden economies in Western Europe.

However, Romania is lagging behind on labor productivity which is 41.7 percent of the EU average. Vass mentioned that Romania has a level of 31 percent of GDP for its public debt, while the EU average is 80.2 percent.

Ovidiu Posirca

BR Magazine | Latest Issue

Download PDF: Business Review Magazine March (II) 2024 Issue

The March (II) 2024 issue of Business Review Magazine is now available in digital format, featuring the main cover story titled “BAT DBS Romania Hub: A Vibrant New Office For An Employee-Centric
Newsroom | 27/03/2024 | 17:32
Advertisement Advertisement
Close ×

We use cookies for keeping our website reliable and secure, personalising content and ads, providing social media features and to analyse how our website is used.

Accept & continue