The International Monetary Fund (IMF) maintains its 0.5%
economic decline forecast for this year and does not expect the 25%
cut in the budget-paid employees’ salaries and the VAT raise
operated in order to curb the public budget deficit to make a
significant impact on the Gross Domestic Product (GDP).
“We do not anticipate additional negative effects on the GDP
as a result of the VAT increase compared with those of the spending
cut measures previously announced. The pensioners will have more
money to spend, which will stimulate economy but on the other hand
people will pay a higher VAT, therefore they will have less money
to spend. Thus the two effects will cancel each other out,” Jeffrey
Franks, head of the IMF’s review mission, was quoted as saying by
Mediafax.
On the other hand, the financial institution revised its
inflation target for 2010 upwards to 7.9%, compared with the 3.5%
initially set in the agreement signed with Romania. The new
inflation target was approved by IMF’s Managing Board in the
meeting on Friday, when the release of the fifth tranche worth 913
million euros of the loan taken by Romania last spring was
approved. The money will reach NBR’s accounts this week.

Subiecte #IMF#Inflation#VAT