IMF coughs up bail-out cash

The International Monetary Fund (IMF) will cough up its next bail-out cash for the Romanian economy of 2.45 billion Euro, following its reluctance to grant the money during the political turmoil surrounding last year’s bitter presidential campaign

March 2010 - From the Print Edition

“Policy implementation has been strong despite a difficult political and economic environment,” said John Lipsky, first deputy managing director and acting chair, IMF. “Nonetheless, continued efforts to fully implement the economic programme [by the Government] remains essential to strengthen macroeconomic stability and provide the basis for strong, sustainable growth.”
The challenges Romania faces include reducing its deficit to stabilise the public debt-to-GDP ratio and to comply with the criteria for accession to the Euro, predicted for 2014 or 2015.
The IMF called for continual curtailing of public spending, but said the authorities are “strongly committed” to pursue further structural reforms to permanently address the fiscal challenge and improve economic growth.
“Pension reform, public employment and wage reforms, and improvements in public sector efficiency will be key,” said a statement.
This will include unpopular reforms this year which could lead to the sacking of 10,000s of public workers.
The targeting of inflation and Romania’s flexible exchange rate policy also helped to cushion the impact of the crisis, while providing an appropriate anchor for monetary policy, said the IMF.
“The Romanian financial sector continues to weather the crisis well, despite increasing non-performing loans,” said Lipsky. “Continued supervisory vigilance will be necessary to respond to threats to the stability of the system, as well as to possible spillover effects.”
So far the IMF has propped up the Romanian economy in the last year with 9.32 billion Euro and has a further 3.59 billion Euro available for Romania as part of the deal.