May 31 (SeeNews) - The International Monetary Fund (IMF) said it raised its forecast for Romania's economic growth forecast to 7% from 6% predicted in April and advised the government to restart structural and governance reforms.
Romania’s economic pickup appears to have been the fastest among the EU countries since the last quarter of 2020, the IMF said in a press release on Friday evening, following the conclusion of Article IV consultations.
A better agricultural harvest is expected to support Romania's economic output later this year, the IMF said, adding that the main downside risk to the outlook stems from unexpected adverse shifts in the evolution of the pandemic, including possibly due to new virus strains, shorter vaccine effectiveness, or unwillingness to vaccinate, the global lender noted.
As the recovery is becoming entrenched, policy efforts should focus on fiscal-structural reforms to help rebuild room for fiscal policy maneuver over the medium term and comply with EU norms, the IMF said. Also, governance improvements should be an integral part of revenue administration reforms, including to limit corruption vulnerabilities. Effective governance is also central to improving public investment management.
Over the next five years, absorption of large EU funds will be pivotal to Romania’s economic performance, and the available resources present a unique opportunity to fast-track income convergence with the EU and transition to a more digital and greener economy, the IMF also said.
An IMF mission virtually visited Romania during May 10-28 to evaluate the state of the country's economy.
Currently, Romania has no ongoing funding agreement with the IMF.
(1 euro=4.9190 lei)