“The authorities’ commitment to continue the fiscal adjustment process, underpinned by the requirements under the EU governance framework, and undertake further tax and spending reforms, including on health care, is welcome. At the same time, with Romania having exited the EDP (excessive deficit procedures, e.n.), pressures for populist measures are on the rise that would unwind earlier difficult reforms or create new risks. These pressures need to be resisted,” the IMF said in its staff report on Romania’s loan request.
The European Union Council closed excessive deficit procedures for Romania at the end of June.
Moreover, the IMF recommends Romania should overcome “internal strife”, which have cramped institutional reforms, including investment planning reforms.
“Bold, concerted efforts are needed to improve the absorption of EU structural funds. Institutional reforms to permanently address government arrears should be expedited to safeguard the achievements made thus far,” the report reads.
The IMF’s executive board last week approved a new EUR1.98 billion precautionary credit line for Romania, the third such financial package the eastern European country has received in the last four years.
Romania also requested EUR2 billion in financing from the European Union, while EUR1 billion remains available under a World Bank policy loan.