The International Monetary Fund is in no rush to conclude a new agreement with Romania. Although a new IMF mission is due in Bucharest next Monday, discussions may go on until the beginning of next year, as the institution's Board needs to be persuaded that a new agreement is in order.
The Fund's directors are not happy with IMF's underperformance in its relation with Romania, as only one of the past 12 years' seven agreements was actually finalised.
Romania's current macroeconomic situation does not provide enough reasons to conclude a new accord, at least not one that can meet the financing needs of the foreign payment balance. However, a new 12-15 month programme may be launched, given the increasing risks associated with the current account deficit, which is getting dangerously near 5% of GDP, and with the inflation rate, which will be hard to trim to a single digit next year unless the Finance Ministry and the National Bank manage to get their policies in sync.
Moreover, the International Monetary Fund is concerned about the fast growth of consumer lending, which could reverberate in inflation, after having triggered an increase in the current account deficit.
Furthermore, macroeconomic performance can be undermined by the authorities' inability to control the losses posted by the state-owned enterprises.
Next week, when talks are due to begin, the IMF officials will look into the Government's infrastructure funding projects (which should not affect the budget deficit) and the deficit financing from the domestic and foreign markets. The IMF favours an increased share of financing from the domestic market.
Neven Mates, IMF's chief-negotiator for Romania is due in Bucharest on November 10. Finance minister Mihai Tanasescu met with IMF officials in Washington on Tuesday, discussing Romania's relation with the Fund.
razvan.voican@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
