People close to the matter told MEDIAFAX that the negotiations with the International Monetary Fund will focus on the level of cash deficit. In case the budget deficit according to ESA 95 (including the losses of state-owned enterprises) exceeds 3% of GDP because of external influence, such as an unexpected slowdown of European economies, Romania might request exemption from the Council for Economic and Financial Affairs (Ecofin).
The Government has committed to reducing the budget deficit to below 3% next year. This is also a condition for the termination of the European Commission’s excessive deficit procedure, opened against Romania in 2009.
The current official economic growth forecast is 3.5-4%, but the figures will be revised downward during the IMF, EC and World Bank evaluation mission, that will begin on October 25. According to the sources, the National Forecast Commission expects growth to be over 2.5% next year, even 2.7-2.8%, but Romanian authorities want to coordinate their estimates with those of the IMF and EC, which are slightly more pessimistic.
“We will definitely not accept the estimates of certain analysts, below 2%,” the sources commented.
The head of IMF’s delegation to Romania, Jeffrey Franks, told MEDIAFAX late-September the IMF would change Romania’s economic growth forecast to some 2% in 2012. The new forecast is half of the current estimation, as external contagion risks have widened.
The European Bank for Reconstruction and Development cut the economic growth forecast for Romania, in 2012, by 2.7 percentage points, to 1.1%, citing the high exposure to the Greek economy, while BCR, the largest local bank, expects 1.9% growth, one point below its initial forecast.
BRD-Groupe Societe Generale (BRD.RO) recently revised downward its forecast on the economic growth to 2.1% in 2012, from 2.8% previously, citing declining contributions from farming and exports.
The most optimistic forecast is that of Raiffeisen Bank, which reduced its GDP growth estimate from 3.5% to 2.7%.