Isarescu: Non-compliance with targets negotiated with IMF cannot be applauded

The best choice for the authorities would be to carry out reforms agreed with the IMF as strictly as possible and cut current and social costs in order to reduce the budget deficit, considering that a tax hike would worsen the state of a recession-hit economy, Mugur Isarescu, Governor of the NBR (National Bank of Romania) said yesterday.

“The non-compliance with the targets negotiated with the IMF cannot be applauded, but one should not be too dramatic, either. We have to be more careful and balanced. We cannot yet tell exactly what the fiscal situation is. We have to wait for assessments to come. We are obviously not in a simple situation, spending cuts are very difficult to make,” Isarescu said.

A new IMF mission has been in Bucharest since Tuesday and will be here until 7th of May in order to assess Romania’s fulfilment of criteria in the first quarter of the year. Looking at previous reviews, the Fund has proven very tolerant, continuing to release loan tranches despite the Government postponing reforms it had committed to. But the latest signals suggest the IMF this time comes with very concrete measures towards reducing the budget deficit.