"Doctor" Franks: We have stabilised the patient, the challenge is the return to growth

The goal of the new arrangement with the IMF is to encourage durable economic growth, says Jeffrey Franks, chief of the negotiation mission with Romania, after the measures decided with the authorities in the past two years failed to bring about the much desired exit from recession.

"The first challenge as far as economic growth is concerned has to do with arrears. (...) We have to eliminate structural barriers to economic growth, while at the same time stimulating investments and the creation of jobs," Franks said yesterday.

After in 2009 it broke its own rules by directly financing Romania's budget deficit, the IMF is now also explicitly taking it upon itself to bring the economy back to growth.

After two years of tailoring Romania's economic policy to suit its vision, the IMF official is already talking from the position of a genuine premier and announces in Romanian what should happen over the next period. Moreover, as far as his rhetoric is concerned, he has adapted it to the local one. "As we hit budget deficit targets, there will be room at some point in the future for cutting taxes, but this is not a short-term, but a medium-to-long-term objective." Even though he is not also a politician, Franks remembers to add an optimistic tone, saying social contributions could be cut in the second part of the year. And here comes another piece of good news for the public: in 2011 there will be no more "forced redundancies", with there being no current plan to further reduce state-employed personnel.

But, since he is not a politician through and through, he does not take the risk of "guaranteeing" Romania's exit from the recession this year, as the authorities have rushed to do.

"The probability of negative economic growth is rather low, lower than 10%," says Franks, adding that above zero growth is a "rather safe bet". Unfortunately, the IMF does not have a very encouraging track record of predicting the economic trend in the past two years.