Monday, May 3, 2010

Romania missed some IMF targets, aid not at risk-FinMin

BUCHAREST, May 2 (Reuters) - Romania has missed some targets agreed with the IMF earlier this year in exchange for aid and talks with the Fund were "complicated", but the aid package was not at risk, Finance Minister Sebastian Vladescu said on Sunday. 

A mission of the Washington-based lender is in Bucharest until May 7 to review the European Union state's progress in meeting conditions of its 20 billion euros ($26.6 billion) aid package.

"There are some numerical targets that are outside the deal because of (poor) macroeconomic evolution," Vladescu told television station ProTV. "I am referring mainly to budget revenues and arrears." 

"Talks with IMF are complicated because the economic situation is complicated but I don't see at the moment a risk of not continuing the deal with the IMF."

Romania recorded a government budget deficit of 1.5 percent of gross domestic product in the first quarter, a touch below a quarterly cap agreed with the IMF.

But with tax receipts to the budget underperforming expectations, analysts have said the government might have met the cap by postponing some payments and gathering arrears.
Vladescu said government arears were at 1.6-1.7 billion lei, up from around 1.5 billion lei ($482 million) at the end of 2009. Under aid terms, Romania has comitted to reduce arrears to 1.3 billion lei at end-March and 480 million lei by end-2010.

The IMF cut its growth estimate for Romania in 2010 to 0.8 percent from an initial 1.3 percent forcast as economic data so far have underperformed expectations and some analysts have said the government will likely ask for a higher deficit target.

Vladescu denied further comment on the issue, saying talks were ongoing. Romania currently targets a 2010 deficit of 5.9 percent of gross domestic product, from last year's 7.2 percent.

"I am confident that the Romanian economy will start to get out of recession this year. A (deficit target of) 5.9 percent is reachable, it remains to be seen if we can reach it."
He also said a move to raise taxes is being analysed, but that Romania was far from a hike in either the VAT or the flat tax on income and profit.

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