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IMF Ups Romania’s 2010 Inflation Target To 7.9% After VAT Hike

The board of the International Monetary Fund approved Friday to increase Romania’s 2010 standby agreement inflation target from 3.5% to 7.9%, following the VAT hike to 24%, evaluation mission head Jeffrey Franks told MEDIAFAX.
IMF Ups Romania’s 2010 Inflation Target To 7.9% After VAT Hike
04 iul. 2010, 14:09, English

Franks said the IMF board meeting approved the amendment to Romania’s inflation target for this year. He added that the IMF expects the inflationary effects of the VAT spike to decrease gradually during the course of the coming year.

Romania’s central bank Wednesday kept its key rate unchanged at 6.25%,, while the minimum requirements were maintained at 15% for Romanian leu-denominated liabilities and at 25% for hard-currency liabilities. The move was widely anticipated in the market, as the sales tax raise to 24% and steep pay cuts in the public sector are expected to increase inflationary pressures and negatively impact the economy.

The central bank’s inflation rate for this year is 3.5% plus/minus 1%.