The IMF is coming to Bucharest today

A mission of the International Monetary Fund (IMF) is expected in Bucharest today, to discuss the economic objectives for the year 2011. The IMF team will stay in Bucharest between July 26th-4th of August for the fifth revision of the Standby-agreement with Romania, following which it will evaluate the evolution of the economy and will discuss with the authorities the economic goals for the following year as well as the budget for 2010.

The release of the sixth tranche of the loan depends on this evaluation.

Douglas Renwick, an analyst with Fitch Ratings, stated: "The depreciation of the leu against the Euro, after the decision of the Constitutional Court (ed. note: concerning the unconstitutionality of the decision to cut pensions), has illustrated the importance that the IMF program has in maintaining confidence in the Romanian economy (after the IMF announced the third payment, the exchange rate stabilized)".

He also said: "We can see that the Government has made a commitment to remain in line with the program of the Fund, by raising VAT after the pension cuts were deemed unconstitutional". The Fitch analyst considers that the following 900 million Euros tranche of the IMF loan will be released in September.

He also said that in terms of rating, "BB+" reflects poor short term outlook, as well as the risk of the IMF program, even though this is not the central hypothesis considered by Fitch. In spite of all this, Romania"s growth potential for the medium term looks promising, in case Romania is capable of escaping its current difficulties, Douglas Renwick concluded.

In March 2009, Romania concluded a foreign financing agreement with the EU, the IMF and other financial institutions, which amount to approximately 20 billion Euros.