Romania ’09 Budget Gap Could Stay Within Agreed Limits – IMF

Lybek reminded the deficit target for 2009 was set at 7.3% of GDP, adding that the IMF assumes Romania will do everything possible to attain this target.

However, the IMF is „pretty firm” on the 5.9% of GDP budget gap agreed for 2010, Lybek said.

The 5.9% of GDP cap is „high enough, anyway” as the IMF showed leniency to Romania so the country’s economic situation would not deteriorate further, the Fund’s official noted.

Lybek reiterated a new IMF assessment mission will visit Romania once the local authorities „are ready.”

Romania obtained EUR20 billion in foreign aid from the IMF, the EU and other lenders in the spring to mitigate the effects of the recession.

The IMF, the EU and other foreign lenders agreed in the spring to loan Romania EUR20 billion to help the country cushion the effects of the economic crisis. In exchange for the aid, Romania committed to a series of tough fiscal and economic crisis, including substantial personnel cuts in the public sector and wage freezing.

However, the collapse of Romania’s minority government mid-October prompted both the IMF and the European Commission to delay new loan tranches until a functioning government was in place.