IMF advises budget restraint

The 4.9% estimated growth makes Romania one of the fastest-growing countries in the entire SE Europe, yet high inflation underscores the need for budgetary restraint and structural reforms to improve efficiency and profitability of state-owned enterprises, an IMF report shows. The document, which was first presented early in April covers the global economic prospects and includes a chapter on the EU accession applicants. “In Romania, the sharp increase in the minimum wage in January and ongoing losses in state-owned enterprises are potential setbacks to the disinflation process and underscore the need to achieve the targeted fiscal adjustment in the 2003 budget and to further harden budget constraints in state-owned enterprises.” As regards Romania’s inflationary rate, IMF estimates it at 16.2% (annual average) this year and 11.6% in 2004, among the highest in CEE. The authors of the report say several candidate countries, Bulgaria included, need to resort to fiscal adjustment. Fortunately, the IMF experts add, fiscal adjustment in the period ahead is likely to take place in a broadly favourable macro environment in the accession countries, which have shown resilience during the global slowdown. ZF