“The members of the board encourage the authorities to push forward with the structural reform process because there are concerns that there are political pressures to weaken that process,” IMF mission chief to Romania, Jeffrey Franks said in a phone interview.
Asked whether the political pressures are linked to the parliament elections in 2012, Franks said the government should maintain a “firm approach” to both fiscal and structural reform policy even with the upcoming elections.
The IMF Thursday completed the second review of Romania’s economic performance under a EUR3.5 billion loan agreement, enabling the disbursement of a new EUR495 million tranche.
Romania made good progress under the arrangement and has met all performance criteria for the second quarter, but deeper reforms are needed to improve economic efficiency and boost growth, the IMF said in a statement.
According to Franks, the worsening conditions in international markets pose additional challenges to Romanian economic recovery.
“I think that is one of the reasons why I think the board members are very keen to be firm in the implementation of the program because that will lower the risks,” he said.
The IMF and Romanian officials are set to discuss the recent delay in the reform process at the next review mission in October, with a focus on the privatization and restructuring of public enterprises, Frank added.
“We can be flexible about the specifics, but we need an overall reform in the sector looking forward, aggressively,” he said.
Under the loan agreement, the Romanian government pledged to sell minority stakes in several key state-run companies and to place 15 such companies under private management.
“The faster the reform process goes in the state-owned enterprises (sector), the more economic growth can be generated in Romania on the basis on those companies,” Franks said.