Has Romania been impacted by the debt crisis in Greece and the ensuing turmoil in financial markets?
Franks: We don’t see strong direct effects now in Romania, but of course this heightens risks. The government is going to have to be more vigilant in how it implements policies going forward, to avoid any effects from what is going on elsewhere in Europe. Certainly, the fact the European economy is recovering less quickly than some other regions is affecting Romania. The economy’s return to positive growth is delayed and somewhat weaker than we had originally anticipated. As a consequence, we have revised our economic forecast down from 0.8 percent of GDP to -0.5 percent for 2010. But growth will rebound in 2011. IMF Survey: The government has just announced new austerity measures, including a 25 percent cut in public sector wages. Was that really necessary? Franks: Well, the government found itself in a difficult situation because the revised forecast for the deficit for 2010 with no action would have put the deficit at about 9 percent of GDP. So serious action was required. There wer
