IMF sanctions $1.7 billion aid to Romania

The executive board of the International Monetary Fund (IMF) yesterday approved immediate disbursement of SDR769 million ($1.17 billion) to Romania, bringing the total disbursements under a 24-month Stand-By Arrangement (SBA) programme to SDR10.569 billion.

''Policy implementation under the fund-supported arrangement has remained strong,'' John Lipsky, the IMF's first deputy managing director.

He, however, added that progress on the elimination of domestic arrears has been slower than envisaged. ''The authorities have taken important structural measures, including pension and public wage reforms and the passage of a prudent 2011 budget'', Lipsky said.

In completing the review, the IMF also approved Romania's requests for a waiver of non-observance of the end-December 2010 performance criterion on general government domestic arrears and for a waiver of applicability of the end-December 2010 performance criteria on the general government overall balance.

''Romania is now on a clear path to meeting its short- and medium-term fiscal goals. The current challenge is to fully implement the approved reforms and maintain tight control over expenditures to assure that the budget parameters are observed,'' Lipski said.

Lipsky, however, cautioned that further steps are crucial in the healthcare sector and in public enterprises to control spending pressures.