Romanian President Says IMF Renegotiation Not On Govt’s To-Do List, But Highly Possible

Romanian President Traian Basescu told a press conference Thursday that the Government is not working on a renegotiation of the stand-by agreement with the International Monetary Fund, stressing, however, that the agreement could be renegotiated at any time.

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Imaginea articolului Romanian President Says IMF Renegotiation Not On Govt’s To-Do List, But Highly Possible

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The President said that although the Government is not currently working on a renegotiation of the stand-by agreement with the IMF, the situation might arise if Romanians reject the recently announced austerity measures. He added that renegotiations would cause the loss of the upcoming tranche of the IMF-run loan which, in turn, would render tax increases unavoidable.

Joint teams from the IMF, the European Commission and the World Bank visited Romania between April 27 and May 10 for the fourth review of the country's performance under the loan agreement.

At the end of the mission, Romanian authorities announced a series of austerity measures aimed at lowering the budget deficit and ailing the economy, including a 25% cut in public wages.

Romania and the IMF have agreed to a budget deficit of 6.8% of the gross domestic product in 2010, from an initial target of 5.9% of GDP.

In addition, the government promised to cut the number of public employees by 70,000 this year, to 1.29 million and pledged to "aggressively" revive the privatization program.

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