A team of Romanian authorities will attend the yearly IMF-WB spring meeting in mid-April [16-17], when talks on the second and third reviews under the stand-by arrangement will be resumed, a joint release of the central bank, government and IMF reads.
The release was issued by the Romanian Central Bank and is not signed. "It is hoped" that an agreement will be reached by the middle of the year, when the impact of the lower income and profit tax rates as well as capital account liberalisation can be better assessed. The release refers to a "broad understanding" between the Romanian authorities and the IMF on the need for a prudent fiscal policy that would prevent imbalances and on the need to strengthen the revenue base of the budget amid large accession-related expenditures over the next 2-4 years. The two sides express concerns about the impact of the recent appreciation of the domestic currency on the competitiveness of the country's exports, and are closely monitoring current and capital account developments in assessing the appropriate stance of fiscal and monetary policies for the transition period.
Separately, deputy PM Adriean Videanu confirmed that the IMF is ready to negotiate a 0.7%-of-GDP fiscal deficit for this year. Increasing VAT, profit tax and income tax rates is unacceptable, he furthered. Videanu explained that further discussions with the IMF will be grounded on the concrete outcome of the budget, and not estimates. A Fund's team is expected after the April 16-17 meeting in Bucharest, he announced.