IMF and EU experts dispatched to cross-examine Romania

Romania has come under scrutiny these days. Both the International Monetary Fund and the European Union have sent experts to Bucharest to compare the data reported by the authorities against the economic situation.
The experts will also analyse the Government’s economic plans for the next two years.
The European Union might decide for a more active involvement in monitoring Romania’s economic performance, given that the stand-by agreement with the IMF ends on October 15. EU used to rely on the Fund’s monitoring until now, as it felt it was strict enough to discipline the economic policy.
Romania could “benefit” from double monitoring, considering both IMF and EU’s fears about slip-ups, particularly because the accession target date is getting nearer and nearer.
One of the main reasons for concern is the risk of seeing the authorities lose control over the inflation, considering 2004 is an electoral year.
This is why the authorities now have to come up with arguments on the steps they are to take in order to peg the inflation and maintain the downward trend.
Concerned about seeing inflation rekindle, the IMF at some point recommended the National Bank of Romania (NBR) to adopt the aggressive policy the bank is now using to purge the excess cash from the monetary market.
Both IMF and EU are not at all convinced the increase in the minimum wage will not push inflation up.
Theoretically, this raise should mainly show in consumption growth, and therefore in economic growth, which is not happening in an economy like the Romanian one.
On the other hand, the authorities must come to terms with the IMF and EU about the actual economic growth registered last year. The data available so far show GDP to have gained 4.9% last year, but the authorities are now saying the final methodology points to 5.1%-5.2% growth.