Updated on
Summary International Monetary Fund Tuesday voiced concern over the ongoing political crisis in Romania.
To be frank, we are a little bit worried about the political situation and (its) impact on the economy, IMF negotiator Romania Erik de Vrijer said during a meeting with interim president Crin Antonescu.Over the last few years Romania has made progress in recovering from the financial crisis and the economy has made progress in stabilizing inflation and the budget situation but the current turmoil has taken its toll on the economy, he added.The IMF official said that the political crisis had undermined investor confidence and Romanias standing in financial markets, as seen in a depreciation of the Romanian leu and higher borrowing costs.It is important for the government to focus on macroeconomic priorities, which means pushing ahead with sound budgetary policies and with reforms that will enable the economy to grow faster than at the moment, he stressed.The IMF, the European Union and the World Bank started a mission to Romania last Wednesday to assess progress in structural reforms, privatising energy companies and reducing the arrears of state-owned enterprises.The trip was delayed by a week in hopes that a referendum to impeach centre-right President Traian Basescu will bring the politial crisis to an end.But nine days after the vote, it is still unclear if the referendum was valid, while the Constitutional court delayed ruling on the issue until the end of the month.Meanwhile analysts say most reforms have been blocked while foreign investment has dropped to a record low.Romania obtained a 20-billion-euro ($25-billion) rescue package from the IMF, the EU and the World Bank in May 2009, in exchange for drastic spending cuts.The austerity cure helped it emerge from two years of severe recession.In March 2011, the IMF and the EU agreed to provide the Balkan country with a fresh credit line of five billion euros to be drawn only in case of emergency.
