Positive outcome for IMF talks in Bucharest

"Subject to approval by IMF Management and the Executive Board, the seventh disbursement (SDR 769 million or almost 0.9 billion Euro) would become available,” said Franks. "Preliminary data for the third quarter suggest that the performance criteria were met, with the exception of the ceiling on general government arrears. The government has promised that firm action will be taken to ensure that central government arrears are mostly eliminated for the remainder of the program,” he added.  
The IMF official also said the economic activity was stabilizing and he expected growth of 1.5 - two per cent in 2011 (compared to around -2 per cent in 2010). “Headline inflation has jumped in recent months due to the effects of the necessary July VAT increase and food price pressures. We expect inflation to peak at slightly above eight per cent at end 2010 before returning within the National Bank of ’s target range in the course of 2011. We project a current account deficit of five - six per cent of GDP for 2010.”  
Franks also said his team had agreed with the government on the main components of a 2011 budget which should produce a deficit of 4.4 per cent of GDP (in cash terms). “We have also agreed on a timetable for action on key structural reforms, including approval of the new unitary public pay law and the enactment of the pension law.”  
About the banking system, Franks said it continued to weather the economic crisis well and banks remained well-capitalized and liquid. “The capital adequacy ratio at end-September was 14.6 percent and all banks exceeded 11 percent (mandatory ratio is eight per cent). Non-performing loans are increasing and are causing losses, but there are sufficient buffers in place to cushion the impact. We have agreed that improvements in consumer protection are needed in the banking sector, but that actions in this area must respect EU directives and not endanger the stability of banks."