imf approves further 2750 million dollars for romania
News Posted On: 25 September 2009
The International Monetary Fund has approved a further 2.75 billion Dollars in standby funding for Romania, bringing the total awarded the Eastern European state to 18 billion since the onset of the crisis. The extra funding reflects the worsening of Romania's recession since the initial 15.25 billion was awarded.
"Against the backdrop of a significant deterioration in economic activity since the approval of the stand-by arrangement in May, policy implementation has been strong," he said.
"The deeper than expected economic downturn, however, requires a recalibration of policies so as to strike an appropriate balance between the short-term response to the crisis and the medium-term policy objectives."
Lipsky said a revised program for the country would focus on "permanent reductions in current spending, while preserving capital and social security net spending."
But he warned that the reductions would require "additional reforms" in the areas that represent the largest fiscal risk, including "expenditure commitments, pension reform, contingent liabilities and public entities outside the central government."
The additional funding comes a couple of weeks after Eurostat; the European Union's statistical office revealed that Romania's economy had contracted by 1.2% in the second quarter, when many European countries emerged from recession. This however was a major slowdown in the contraction, which had been accelerating previously, hitting -4.6% in the first quarter. The IMF assistance could well have played a part in this.
The IMF assistance is a good thing for Romania, according to Les Calvert, director of overseas property portal Property Abroad.com.
"Romania has not endured the recession as well as other comparable countries like Albania and Slovakia have. This indicates that the government's policies for managing the economy and dealing with the crisis may not have been as competent. The IMF's guidelines and stipulations on the financing could prove to be good for Romania, not only in the short-term but the long-term also," he said.
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