Romania has met all the performance criteria set by the stand-by agreement concluded with the IMF, but it must proceed with the reforms in order to achieve economic growth, Jeffrey Franks, the head of the IMF mission to Romania said yesterday.

He said that the economic growth rate for this year, which is expected to reach 1.5%, is still below the country"s potential. On the other hand, next year, the growth of 3.5%-4% predicted for the Romanian economy for next year is nearing the country"s real potential for economic growth, he considers.

The head of the IMF mission said: "The authorities were resolute in implementing the policies stipulated in the program. In order to make optimum use of Romania"s potential for growth it is essential to continue with the implementation of these policies. They are being strengthened in order to consolidate Romania"s position, which will allow it to handle the volatility of the financial markets".

The Romanian authorities need to continue the reform in the healthcare system, to lower the arrears of the state, to restructure state owned companies and to increase investments, including through the absorption of European funds.

Jeffrey Franks said: "The first challenge is the healthcare system. Unfortunately, the system is quite sick. Spending in the system exceeds the allocated resources, which weakens its financial health. These insufficient resources are inefficiently spent, depriving the needy. The healthcare system needs to undergo a complete reform".

He added that in the coming months, the government would draft a definitive reform, both of the revenue and the spending of the system. Arrears in the healthcare sector are currently near zero, but there is a risk that they would increase, according to him.

* Franks: Arrears may fall by 4-5 billion by the end of the year by the end of the year