Romanian SMEs Assoc: IMF To Revise ’10 GDP Forecast To -2%

Speaking at the end of a meeting with IMF mission chief Jeffrey Franks, Nicolescu said the fund’s recommendation for Romanian employers is to focus on stability to attract new foreign investments.

Modifying the value added tax level again over the next 12 months is out of the question, Nicolescu added.

Romanian government has raised the VAT level to 24% from 19% starting with July 1, in a move to boost revenue and contain the budget deficit to below 6.8% this year.

The measure was loudly criticized by companies, which said the higher VAT would further hinder consumption and will sent many firms into bankruptcy.

Joint missions from the IMF and the EU will be in Bucharest until August 4 for a new review of Romania’s progress under a EUR20 billion aid package signed early last year.

Following the mission, the IMF will decide whether to disburse a sixth loan tranche to Romania, worth around EUR900 million.

On Monday, Franks said the IMF will revise downward its forecast on Romanian economic growth for 2010, but the new prognosis will be less pessimistic than a 3% contraction envisaged by the European Bank for Reconstruction and Development.

In its June forecast, the IMF said Romanian economy is expected to stagnate or decline by 0.5% this year, from a 7.1% contraction a year earlier.IM