IMF expects 0.5-1% growth for Romania in 2010

The International Monetary Fund (IMF) anticipates slight economic growth (0.5%-1%) for Romania in 2010, a gradual recovery that will occur after the next three quarters, which will see the Gross Domestic Product shrink further. For 2009, the Fund expects an 8-8.5% economic decline, twice as high as the previous forecast – 4.1% made in March. The projections were presented yesterday by the head of the IMF delegation, Jeffrey Franks, in a press conference summarising the conclusions of the first evaluation of the stand-by agreement with Romania.

The IMF will support the National Bank of Romania (BNR) in its attempt to relax monetary policy, but the NBR will need to be “cautious”, considering the inflationary pressures and the exchange rate fluctuations, Franks also said.

“We are supporting a gradual relaxation of the National Bank’s monetary policy, but this will have to be done at the right time. The NBR will have to remain cautious, because of inflationary pressures and the exchange rate fluctuations,” added Franks.

Also, wage-related costs in the public sector should go down by 0.5% of the GDP per year, starting in 2010, so as to account for less than 6% of the GDP within the next 4-5 years, according to the head of the IMF delegation.