The IMF has given the Romanian government a big thumbs up. New funds to the tune of EUR 507 million are available following the latest and third review of the stand by agreement approved on March 25, 2011. The Romanian government continues to treat the available funding as a precautionary measure and thus does not intend to draw from it. Romania's economy is said to be on track and the IMF highlights the progress so far. “Romania has made good progress under the Fund-supported program. Policy implementation has remained strong and all program targets were met,” said David Lipton, First Deputy Managing Director and Acting Chair.

The review also warns of risks in the banking sector. After ratings agencies' concerns, the IMF is the latest to warn of 2012 banking difficulties. “Risks in the banking system, arising from difficulties elsewhere in Europe, warrant strong supervisory vigilance,” said Lipton. The overall tone of the review was, however, positive. The IMF attributed the the forecasted banking sector problems to forces outside Romania and gave positive predictions for 2012: “The authorities are on track to meet their fiscal targets for 2011, and their 2012 budget should bring the deficit well below 3 percent of GDP next year.”

Liam Lever, liam@romania-insider.com

(photo source: IMF)