According to a letter of intent of the Romanian Government to the International Monetary Fund said that government of Romania is expecting an economic growth of 1.5% in 2011 and of 3.75% in 2012, on solid exports and gradual recovery of domestic demand.

The IMF posted the letter of intent on its website, together with a technical memorandum of understanding.

According to the letter, inflation exceeded the expectations of the Romanian Government. The letter said that “Inflation is higher than expected, due to increased food and energy prices. These factors, plus further needed increases in administered prices, will keep inflation above 5 percent for the remainder of the year, making the achievement of the National Bank of Romania’ s end 2011 inflation target improbable.”

BNR Governor Mugur Isarescu announced this May that the 2011 inflation projection is 5.1% YoY and the 2012 inflation will be 3.6%,

According to the letter, the current account deficit has shrunk considerably to 4.1% of Gross Domestic Product in 2010 and is expected to remain below 5% of GDP in 2011-12.

The Romanian Government said that it remains committed to the cash fiscal deficit target of 4.4% of GDP in 2011 and to bringing the deficit down to within 3% of GDP, which will require continued expenditure restraint, including on the wage bill and subsidies.

(Sourced from english.financiare.ro)