IMF Ups Romania GDP Growth Forecast To -7% In ‘09, +1.3% In '10

Romania's economic contraction would be contained to about 7% this year, while the gross domestic product will grow by 1.3% in 2010, IMF mission chief to Romania Jeffrey Franks said Thursday. The IMF has previously estimated a 7.5%-8% GDP contraction in 2009 and a slight growth of 0.5% in 2010.

"Romania's macroeconomic outlook seems better than in early November due to stronger external demand," Franks said.

The IMF halted disbursements to Romania from a EUR13 billion stand-by loan, agreed in spring, until the country has a proper government in place. The IMF loan is part of a broader package that also includes funds from the EU and other international lenders.

On Thursday, Romania's President Traian Basescu designated democrat liberal leader and acting Prime Minister Emil Boc to head the country's new government. Basescu said Romania might receive two new tranches, which amount to EUR2.3 billion, from the IMF on February 17, provided it can adopt the 2010 budget by mid-January.

A joint technical team from the IMF and the European Commission visited Bucharest from December 14 to 16 to continue work on the 2010 draft budget.

IMF's Franks said that a joint IMF, EC, and World Bank mission to conclude the second review under the IMF-supported stand-by arrangement could take place in January, once a new government is in place and parliamentary action is forthcoming.

"Based on progress so far, we are optimistic that the staff can move the review quickly to the IMF Executive Board for a meeting by mid-February. Subject to the IMF Board's favorable decision, disbursement can follow," Franks concluded.

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