The goal of the new arrangement with the IMF is to encouragedurable economic growth, says Jeffrey Franks, chief of thenegotiation mission with Romania, after the measures decided withthe authorities in the past two years failed to bring about themuch desired exit from recession.
"The first challenge as far as economic growth is concerned hasto do with arrears. (...) We have to eliminate structural barriersto economic growth, while at the same time stimulating investmentsand the creation of jobs," Franks said yesterday.
After in 2009 it broke its own rules by directly financingRomania's budget deficit, the IMF is now also explicitly taking itupon itself to bring the economy back to growth.
After two years of tailoring Romania's economic policy to suitits vision, the IMF official is already talking from the positionof a genuine premier and announces in Romanian what should happenover the next period. Moreover, as far as his rhetoric isconcerned, he has adapted it to the local one. "As we hit budgetdeficit targets, there will be room at some point in the future forcutting taxes, but this is not a short-term, but amedium-to-long-term objective." Even though he is not also apolitician, Franks remembers to add an optimistic tone, sayingsocial contributions could be cut in the second part of the year.And here comes another piece of good news for the public: in 2011there will be no more "forced redundancies", with there being nocurrent plan to further reduce state-employed personnel.
But, since he is not a politician through and through, he doesnot take the risk of "guaranteeing" Romania's exit from therecession 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 veryencouraging track record of predicting the economic trend in thepast two years.
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