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IMF recommends:

Fiscal policy remain focal point of Romania’s macroeconomic strategy

de     HotNews.ro
Luni, 20 februarie 2006, 0:00


Romania needs to make progress in deflation, reducing the current account deficit, improving business environment, creating new jobs and ensuring the suitable framework for EU funds, writes the annual report of the International Monetary Fund published Monday.

The IMF experts warned about the macroeconomic imbalances amplified by the slowdown of economic growth, the high level of inflation (approaching 8.6% in 2006 compared to 7.5 in 2005), the current account deficit increase, that are diminishing Romania’s external competitiveness.

To overcome the potential problems, the IMF suggests that the Romanian authorities take into account some possible increases of the VAT, single tax, the taxation base, administrative taxes, and property taxes, and improve incomes’ management.

Former Finance minister, Ionut Popescu, said for Hotnews.ro that he supported all measures suggested by the IMF,which he also promoted while in office, except for the single tax adjustment.

The IMF encouraged privatizations of the Savings House (CEC) and of energy producers. Ionut Popescu also believes it is in the state’s interest to speed the privatization of CEC.

The Fund considers that only one salary increase should occur in the public sector this year, as raised wages could lead to a 1 per cent GDP deficit. In regard to the monetary policy, the report considers the inflation reduction to 5 per cent as highly unlikely.

IMF showed interest in restarting the bilateral dialogue for concluding assessments within the stand-by accord, before it expired later this year. The document was signed in July 2004, however talks broke off in October last year.






















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