Finance Minister announces deeper recession than expected in 2010

Finance Minister Sebastian Vladescu announced yesterday that Romania would “experience deeper recession than expected” in 2010, with the new macroeconomic forecasts for this year being currently worked on. An IMF team will come to Bucharest after July 20, but in the meantime the Government is feverishly waiting for the Fund to approve the release of the fifth tranche worth around 900 million euros, after a VAT hike from 19% to 24% was announced.

“The Romanian authorities have shown strong commitment to their economic program by quickly identifying compensatory measures after the ruling of the Constitutional Court. The IMF’s Executive Board is scheduled to meet on Friday July 2, 2010 to conduct the fourth review of Romania’s Stand-By Arrangement (SBA). Subject to the Board’s completion of this review, the fifth tranche (SDR768 million, or about 900 million euros) will become available to the National Bank of Romania after two working days,” Tonny Lybek, IMF regional representative for Romania and Bulgaria said in a press release. The IMF postponed the board meeting, originally scheduled for Monday, after the Romanian Constitutional Court ruled as unconstitutional some of the austerity measures proposed by the Government.