
Executive Board Assessment
Executive Directors commended the Romanian authorities for restoring macroeconomic stability and reducing large external and fiscal imbalances. Directors noted however that the difficult external environment and domestic political uncertainty are weighing on the economy. They welcomed the authorities’ continued commitment to the program objectives, stressing the importance of sustained policy discipline and accelerated implementation of structural reforms to reinforce the economy’s resilience and boost its growth potential. Directors commended the sizeable fiscal adjustment undertaken and welcomed the authorities’ commitment to stay within the 2012 fiscal target of 3 percent and reach the medium-term objective by 2014. They recognized the significant progress made in reducing current spending and encouraged continued restraint ahead of the upcoming elections. Directors emphasized the importance of prioritizing capital outlays and improving EU funds absorption. They also underscored the need to take remedial measures to reduce outstanding arrears and avoid further accumulation of arrears, in particular at the local government level. Reform of the healthcare system should help address medium-term fiscal pressures, while improving service delivery. Directors stressed that accelerating the pace of structural reforms is critical to fostering higher and inclusive growth. They welcomed the progress on labor market reform and energy prices but underscored the need for further action in the energy and transportation sectors, while protecting the poor. Deeper reform and privatization of the state-owned enterprises and improvements in the institutional and regulatory frameworks and the business climate are priorities going forward. Directors also called for stepped up efforts to increase the employment rate and reform the education system. Directors underscored the importance of pursuing a prudent monetary policy stance while maintaining exchange rate flexibility. They encouraged the central bank to limit intervention in the foreign exchange market to smoothing volatility and to stand ready to tighten the policy stance should exchange rate pressures persist. Directors noted that the Romanian banking system maintains significant buffers to deal with the potential adverse effects of tensions in euro area financial markets. They encouraged the authorities to continue to strengthen bank supervision and the financial sector safety net, and mitigate the rise in nonperforming loans. Detailed information available on www.imf.org
Executive Directors commended the Romanian authorities for restoring macroeconomic stability and reducing large external and fiscal imbalances. Directors noted however that the difficult external environment and domestic political uncertainty are weighing on the economy. They welcomed the authorities’ continued commitment to the program objectives, stressing the importance of sustained policy discipline and accelerated implementation of structural reforms to reinforce the economy’s resilience and boost its growth potential. Directors commended the sizeable fiscal adjustment undertaken and welcomed the authorities’ commitment to stay within the 2012 fiscal target of 3 percent and reach the medium-term objective by 2014. They recognized the significant progress made in reducing current spending and encouraged continued restraint ahead of the upcoming elections. Directors emphasized the importance of prioritizing capital outlays and improving EU funds absorption. They also underscored the need to take remedial measures to reduce outstanding arrears and avoid further accumulation of arrears, in particular at the local government level. Reform of the healthcare system should help address medium-term fiscal pressures, while improving service delivery. Directors stressed that accelerating the pace of structural reforms is critical to fostering higher and inclusive growth. They welcomed the progress on labor market reform and energy prices but underscored the need for further action in the energy and transportation sectors, while protecting the poor. Deeper reform and privatization of the state-owned enterprises and improvements in the institutional and regulatory frameworks and the business climate are priorities going forward. Directors also called for stepped up efforts to increase the employment rate and reform the education system. Directors underscored the importance of pursuing a prudent monetary policy stance while maintaining exchange rate flexibility. They encouraged the central bank to limit intervention in the foreign exchange market to smoothing volatility and to stand ready to tighten the policy stance should exchange rate pressures persist. Directors noted that the Romanian banking system maintains significant buffers to deal with the potential adverse effects of tensions in euro area financial markets. They encouraged the authorities to continue to strengthen bank supervision and the financial sector safety net, and mitigate the rise in nonperforming loans. Detailed information available on www.imf.org