The IMF is not imposing one specific means of cutting the budget deficit, with the Government having a choice between cutting public spending and hiking taxes, said Jeffrey Franks, head of the IMF mission that evaluates the stand-by arrangement, in the “20 Years Later” show broadcast by ProTV on Sunday.
Romania committed in its arrangement with the IMF to cut the budget deficit from over 7% of GDP last year to 5.9% of GDP in 2010 and to less than 3% of GDP by 2012.
The authorities announced a series of measures to cut spending, but few have so far been put into practice, especially as far as salary and pension spending is concerned. In the letter of intent that comes in addition to the stand-by arrangement, the Government has committed to adopting additional measures to fill the revenue void if the deficit cut does not meet this year’s target.
Finance Minister Sebastian Vladescu said only spending cuts have been considered so far, but no revenue increase, which could be obtained from a prospective tax hike.

Subiecte #IMF#Jeffrey Franks