IMF recommends Romanian Central Bank consolidation of monetary policy and budgetary deficit under 2%

Romania’s economic growth will slow down to 5.4% in 2008, after the 6% growth in 2007, while the inflation is most likely to reach 7%. The current account deficit will still have a high level, 14%, and the international turbulence on the financial market may affect Romania because the credits will be more expensive, the „Regional Economic Perspectives” report put up by the International monetary Fund (IMF) indicates. Under the circumstances, IMF recommended the Romanian Central Bank (BNR) to continue to consolidate its monetary policy, while the Government should strengthen its fiscal policy, by diminishing the budgetary deficit to less than 2%.

The IMF report estimates that financial turbulence may affect the emerging European states, causing a GNP decrease of 0.8% in 2008 and 0.5% in 2009. The same report shows that a temporary 10% decrease of the credit mass may also cause a 1.5% decrease on the economic growth rate. The real GNP would decrease in Romania and Estonia, countries where the advance of loans was accelerated, the report estimates.

IMF official for Romania and Bulgaria Albert Jaeger declared that the Romanian Central Bank (BNR) should continue to consolidate its monetary policy, adding that IMF prognosis show that the inflation target for 2008 may be reached, in case adequate measures are taken.

IMF foresees a 6.5% inflation rate in 2008, 0.2% more than just a few weeks ago.