External Current Account and Financing Needs Economic Prospects Prospects for recovery in the region in 2000 have if anything improved since September 1999 when the Fund last reviewed the outlook. Romania and Croatia are projected to continue to grow more slowly on average than the smaller countries, but in both these countries growth is projected to firm during the course of the year. In all cases, the sustainability of growth will depend on further progress in addressing macroeconomic imbalances and implementing structural reforms. The Romanian government aims to reduce inflation to 27 percent by end 2000.
Policies are generally consistent with maintaining low inflation in the other countries.
There remains a case for higher official balance of payments financing to support stronger adjustment and reform programs. In view of the high economic and social return to infrastructure spending in Southeast Europe, there is a strong case for additional financing for regional projects. However, taking into account the relatively tight capacity for repayment, due consideration should be given to the appropriate terms for such financing. The program is on track. The macroeconomic strategy emphasizes fiscal consolidation through strengthening tax revenues.