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© 2011 International Monetary Fund
June 2011
IMF Country Report No. 11/158
Romania: First Review under the Stand-By Arrangement and Request for Modification of Performance Criteria—Staff Report; Staff Supplement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Romania.
In the context of the first review under the stand-by arrangement and request for modification of performance criteria, the following documents have been released and are included in this package:
The staff report for the First Review under the Stand-By Arrangement and Request for Modification of Performance Criteria, prepared by a staff team of the IMF, following discussions that ended on May 9, 2011, with the officials of Romania on economic developments and policies. Based on information available at the time of these discussions, the staff report was completed on June 9, 2011. The views expressed in the staff report are those of the staff team and do not necessarily reflect the views of the Executive Board of the IMF.
A staff supplement of June 27, 2011 updating information on recent developments.
A Press Release summarizing the views of the Executive Board as expressed during its June 27, 2011 discussion of the staff report that completed the request and/or review.
A statement by the Executive Director for Romania.
The document listed below has been or will be separately released.
Letter of Intent and TMU sent to the IMF by the authorities of Romania*
*Also included in Staff Report
The policy of publication of staff reports and other documents allows for the deletion of market-sensitive information.
Copies of this report are available to the public from
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Price: $18.00 a copy
International Monetary Fund
Washington, D.C.
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INTERNATIONAL MONETARY FUND
ROMANIA
First Review Under the Stand-By Arrangement and Request for Modification of Performance Criteria
Prepared by the European Department (In Consultation with Other Departments)
Approved by Poul M. Thomsen and Aasim Husain
June 9, 2011
Stand-By Arrangement (SBA) and follow-up SBA: A new 24-month, SDR 3,090.6 million (€3.5 billion, US$4.9 billion, 300 percent of quota) Stand-By Arrangement was approved by the Executive Board on March 25, 2011 (Country Report No.11/80) and became effective March 31, 2011. The second tranche of SDR 430 million will be made available upon completion of this review. The authorities are treating the arrangement as precautionary. Funds under the new program are also provided by the European Union (on a precautionary basis) and the World Bank.
Status of the current program: All end-March quantitative performance criteria and indicative targets for the first review were met. Inflation remained within the inner band of the inflation consultation mechanism. All structural benchmarks, including on stock-taking of arrears in the general government and state-owned enterprises (SOEs), which was reset as a prior action, are expected to be met.
Key issues: The SBA review focused on three issues: (i) measures to assure compliance with fiscal targets while clearing arrears, improving quality of spending and strengthening tax collections; (ii) progress on the structural reform agenda with a focus on energy and transport sectors; and (iii) ensuring continued financial sector stability.
Discussions: Discussions were held in Bucharest, April 27—May 9, 2011. The mission met with President Basescu, Prime Minister Boc, Finance Minister Ialomiţianu, Central Bank Governor Isarescu, other senior officials, representatives of labor and business organizations, and financial institutions. The staff team comprised J. Franks (head), M. Stierle, A. Tuladhar and L. Zhang (all EUR); F. Salman (SPR); L. Eyraud and F. Hasanov (FAD); and M. Dobler (MCM). T. Lybek (Resident Representative) assisted the mission. Discussions were held jointly with the EC, ECB, and World Bank staff.
Contents
I. Introduction and Summary
II. Macroeconomic Developments and Outlook
A. Recent Developments
B. Macroeconomic Outlook and Risks
III. Policy Discussions
A. Fiscal Policies
B. Structural Reforms
C. Financial Sector Policies
D. Monetary and Exchange Rate Policies
IV. Program Modalities and Other Issues
V. Staff Appraisal
Boxes
1. Key Health Care Reform Measures Implemented with the World Bank Assistance
2. Exchange Rate Assessment and Competitiveness
3. The Stand-By Arrangement
Figures
1. Recent Economic Trends
2. Financial Developments
3. Public Debt Sustainability: Bound Tests
4. External Debt Sustainability: Bound Tests
Tables
1. Quantitative Program Targets
2. Performance for First Review and Proposed New Conditionality
3. Selected Economic and Social Indicators, 2007–12
4. Macroeconomic Framework, Current Policies, 2008–16
5. Balance of Payments, 2008–16
6. Gross Financing Requirements, 2010–12
7. General Government Operations, 2008–12
8. Monetary Survey, 2009–12
9. Financial Soundness Indicators, 2008–10
10. Schedule of Reviews and Purchases
11. Indicators of Fund Credit, 2011–16
12. Public Sector Debt Sustainability Framework, 2006–16
13. External Debt Sustainability Framework, 2006–16
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INTERNATIONAL MONETARY FUND
ROMANIA
First Review Under the Stand-By Arrangement, and Request for Modification of Performance Criteria—Supplementary Information
Prepared by the European Department in Consultation with Other Departments
Approved by Poul M. Thomsen and Aasim Husain
June 23, 2011
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Press Release No. 11/257
FOR IMMEDIATE RELEASE
June 27, 2011
International Monetary Fund
Washington, D.C. 20431 USA
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June 27, 2011
