Jeffrey Franks: Romania gained the confidence of the IMF in 2010

Romania succeeded in reversing its image of a "mediocre student", thanks to the fact that the government in Bucharest weathered the motion of no-confidence and the protests against the proposed spending cuts and layoffs demanded by the IMF, the head of the IMF mission for Romania, Jeffrey Franks said in an interview for Bloomberg, quoted by Agerpres.

The board of the IMF is scheduled to meet in the beginning of January 2011 to review Romania"s progress. According to Jeffrey Franks, Romania will probably complete the agreement with the IMF in 2011, the eighth since 1989, to allow it to win a

so it can win a new precautionary standby agreement.

"Romania had the reputation of being a mediocre student in terms of finalizing the economic reforms, and the program with the IMF changed this perception", Jeffrey Franks said. "Romania is currently seen as a country that has made an enormous effort to complete some very difficult reforms that were necessary", the head of the IMF mission for Romania added.

In the opinion of Jeffrey Franks, the pension law, which was approved by the Parliament on December 7th and signed by the president, is a new positive step. Also, PM Emil Boc has requested the quick passing of the wage bill, after his government raised the VAT to 24%, cut public sector wages by 25% as well as reduced the public sector workforce, all to cut the public deficit to 6.8% of the GDP this year and 4.4% of the GDP next year.

"A one or two week delay would not have a significant effect on the new agreement", said Jeffrey Franks. "We intend to continue negotiating a new agreement with the purpose of having it come into effect in April", Franks said, but added that the new agreement would include demands for more structural reforms in labor, infrastructure and capital input, said Franks. "It is very clear that the state sector has not yet been fully restructured. Romania"s economy has areas that still need reforms to increase flexibility and productivity", Jeffrey Franks said.

Even though he feels that Eastern European countries, including Romania has so far been spared the effects of the sovereign debt crisis that hit Portugal, Spain and Italy, Jeffrey Franks considers that this could change in the future, and therefore the Fund will continue to monitor the evolutions in the region carefully.

President Traian Băsescu said on Tuesday, in the Cotroceni Palace, that Romania wants a stand-by agreement with the IMF, that "would not involve giving us money, but that would provide us with the needed technical assistance". He reiterated that concerning the second agreement with the IMF, he is looking for a precautionary agreement that would allow Romania to continue with the reform process.