The IMF's big disappointment after two years of arrangement withRomania is that the economy has yet to return to growth, saysJeffrey Franks, the head of the mission negotiating and managingthe Fund's relationship with Bucharest.
"The absence of economic growth is the big disappointment now thatwe are nearing the end of this arrangement. It is very true thatthe pace of reforms could have been much faster, but even so, verysignificant adjustments have been made, the right policies havebeen implemented and there has been a return to the path of fiscaldiscipline," Franks told ZF yesterday.
This is the first time that a high official involved in thisarrangement admits the big failure of the arrangement to pullRomania out of the crisis.
The IMF had the issue of economic growth on its agenda throughoutthe whole of last year and was very keen to take credit forRomania's return to growth, hoping it would happen as early as in2010.
According to official sources, over the course of last year'snegotiations, especially during the summer round ahead of the VAThike and the salary cuts, the IMF argued in favour of variants thatwould see the Romanian economy return to growth, at odds with theposition of the NBR (Romanian central bank), which argued and stilldoes that GDP growth should not be resumed until reforms are moreadvanced and the economy is restructured.
One thing is certain, though, the arrangement with the IMF, whichaccounts for the bulk of the huge 20 billion-euro loan taken out byRomania in 2009, has failed to pull the country out of recession.So, one can wonder why this gigantic arrangement was necessary,given that the 10 billion-euro injection received in 2009 and the 7billion-euro one received in 2010 did not prevent the economy fromplummeting by an overall 10%.
What is, however, the big achievement of the IMF arrangement, whichsaw Romania take on such a debt?
"There has been no banking crisis in Romania thanks to firm actionby the banks and the NBR," says Franks, suggesting there was a realdanger of this happening.
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