The best choice for the authorities would be to carry outreforms agreed with the IMF as strictly as possible and cut currentand social costs in order to reduce the budget deficit, consideringthat a tax hike would worsen the state of a recession-hit economy,Mugur Isarescu, Governor of the NBR (National Bank of Romania) saidyesterday.
"The non-compliance with the targets negotiated with the IMFcannot be applauded, but one should not be too dramatic, either. Wehave to be more careful and balanced. We cannot yet tell exactlywhat the fiscal situation is. We have to wait for assessments tocome. We are obviously not in a simple situation, spending cuts arevery difficult to make," Isarescu said.
A new IMF mission has been in Bucharest since Tuesday and willbe here until 7th of May in order to assess Romania's fulfilment ofcriteria in the first quarter of the year. Looking at previousreviews, the Fund has proven very tolerant, continuing to releaseloan tranches despite the Government postponing reforms it hadcommitted to. But the latest signals suggest the IMF this timecomes with very concrete measures towards reducing the budgetdeficit.
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