The International Monetary Fund (IMF) maintains its 0.5% economic decline forecast for this year and does not expect the 25% cut in the budget-paid employees' salaries and the VAT raise operated in order to curb the public budget deficit to make a significant impact on the Gross Domestic Product (GDP).

"We do not anticipate additional negative effects on the GDP as a result of the VAT increase compared with those of the spending cut measures previously announced. The pensioners will have more money to spend, which will stimulate economy but on the other hand people will pay a higher VAT, therefore they will have less money to spend. Thus the two effects will cancel each other out," Jeffrey Franks, head of the IMF's review mission, was quoted as saying by Mediafax.

On the other hand, the financial institution revised its inflation target for 2010 upwards to 7.9%, compared with the 3.5% initially set in the agreement signed with Romania. The new inflation target was approved by IMF's Managing Board in the meeting on Friday, when the release of the fifth tranche worth 913 million euros of the loan taken by Romania last spring was approved. The money will reach NBR's accounts this week.

The International Monetary Fund (IMF) maintains its 0.5% economic decline forecast for this year and does not expect the 25% cut in the budget-paid employees' salaries and the VAT raise operated in order to curb the public budget deficit to make a significant impact on the Gross Domestic Product (GDP).

"We do not anticipate additional negative effects on the GDP as a result of the VAT increase compared with those of the spending cut measures previously announced. The pensioners will have more money to spend, which will stimulate economy but on the other hand people will pay a higher VAT, therefore they will have less money to spend. Thus the two effects will cance