IMF cuts down to half Romania's growth forecast in 2012

IMF cuts down to half Romania’s growth forecast in 2012

Newsroom 30/09/2011 | 13:10

The International Monetary Fund (IMF) will cut down to half Romania’s economic growth forecast in 2012 due to the high risks of contagion from external markets, according to Jeffrey Franks, head of the IMF mission in Romania, quoted by Mediafax newswire.

“The GDP forecast for 2012 will most certainly be reduced. It will definitely be smaller than 3.5 percent which we estimate at the moment. I think it will stick to somewhere around 2 percent,” said Franks.

The economic growth forecast of the IMF and the government for this year is 1.5 percent.

In order to counteract the high contagion risks that have increased over the past 3 months, Romania needs to maintain and even speed up reforms in the IMF program, said Franks.

He also said reforms in Romania have slowed down in the last 3 months especially as far as the restructuring and privatization of state companies are concerned. The IMF officials are worried this may have to do with certain political pressures, according to Mediafax.

The reasons for the delay in reforms will be discussed with the Romanian authorities during the next evaluation mission in October.

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