Press statement made by IMF mission chief for Romania
07.02.2002
INTERNATIONAL MONETARY FUND
Office of the Resident Representative in Romania
National Bank of Romania, 25, Lipscani Street, Bucharest
Fax # (401) 312-0788 Tel # (401) 315-5026 Website: www.fmi.ro
PRESS STATEMENT
Today, Mr. Neven Mates, IMF mission chief for Romania, made the following statement:
"An IMF mission visited Bucharest during the period January 27 – February 6, to review the stand-by arrangement that was approved by the Board of the IMF in October 2001.
The mission assessed that macroeconomic developments in the last quarter of 2001 were broadly in line with the program. The annual inflation rate fell to 30 percent in December, close to the program target of 29 percent. The current account deficit remained below 6 percent of GDP, and foreign reserves of the central bank increased substantially more than envisaged under the program. The annual GDP growth estimate for 2001 has been revised up to almost 5 percent on account of a stronger recovery in agriculture, even though industrial production and export growth slowed down in the second half of the year as the activity with Romania’s trading partners weakened. The general government deficit target for 2001 was reached and monetary policy was on track. However, wage dynamic in public enterprises was somewhat above the program target and the collection rates of the main energy utilities worsened. Notwithstanding the successful completion of the privatization of Sidex, progress in other privatization projects and in addressing the issues of state-owned lossmaking enterprises has been modest.
Regarding 2002, several core components of program have been implemented, including the adoption of the 2002 budget, the reduction of the payroll taxes by 3 percentage points, the adjustment of administered prices in the energy sector, and the approval of wage policies for 2002. The Government remains committed to program objectives, particularly to reducing fiscal and quasi-fiscal deficits and continuing with the program of structural reforms. These policies have gained even more importance in the context of the somewhat weaker external environment in early 2002.
The mission has made substantial progress in discussing additional measures in areas where program targets had not been fully met. Discussions will continue on the remaining issues of financial discipline in the energy sector and other lossmaking state-owned enterprises. Some additional revenue measures are also needed to address the recent shortfall in tax collections. These discussions will continue and the mission expects to return to Bucharest soon."