Romania on good direction, but economic recovery fragile

Romania has made significant progress in macroeconomic stabilization under two successive Stand-By Arrangements, but the economic recovery remains fragile, said the International Monetary Fund (IMF) Executive Board 2012 Report released on Wednesday. Romania continues on a good direction, and all performance criteria of the sixth revision of the agreement have been met, except government arrears reduction, said the report, underscoring yet that progress provided by the structural agenda, particularly privatization of state-held enterprises, remains slow. Growth is expected to remain subdued in the near term and to only gradually recover over the medium term, with risks to the outlook mostly on the downside, according to the study. Moreover, with strong trade and financial sector linkages, Romania is exposed to the euro area crisis. Fiscal and external reserves provide a buffer and the banking sector remains well-capitalized. The report stressed that fiscal discipline will be needed, especially in the context of upcoming parliamentary elections, to achieve the fiscal program targets and fiscal stability. The IMF mission will be in Bucharest, from November 6 to 14, to discuss with the Romanian authorities about recent economic developments. The agreement between Romania and the IMF began on March 31, 2011 and is a precautionary one, in value of SDR 3.1 billion (4.6 billion dollars), representing approximately 300 percent of the share that Romania has in the fund.