Brussels, 02/11/2010 (Agence Europe) - On Monday 1 November 2010, the European Commission issued a favourable opinion vis-a-vis Romania's economic policies under the EU Balance of Payments Assistance Programme (see EUROPE 10221). Formulated after a joint mission to Romania by the European Commission, the International Monetary Fund and the World Bank at the end of last month, the opinion paves the way for the payment of the fourth section of the total €1.2 billion in Balance of Payments Assistance to Romania.
In order to receive the aid, Romania will have to implement various actions including adoption of the 2011 budget and the enactment of the unified wage law, improvement of consumer rights and making the national central bank the sole supervisor over the Romanian banking system. The Commission believes that the target of cutting the public debt by 7.3% of national GDP is feasible, but points out that insufficient progress has been made in reducing the arrears of loss-making state-owned enterprises and further effort is required to increase the low rate of absorption of EU funds. The Romanian economy is in recession this year (with an average 2% fall in GDP), but is expected to pull into the black next year (with growth of around 1.5% of GDP). Following a hike in value-added tax in July 2010 and an increase in the price of food, inflation is expected to shrink and hover around 3% in 2011. (M.B. trans fl)