This declaration in a Fortran program causes the compiler to turn off its usual system of implicit declaration of variables.

Normally, undeclared variable names beginning with i, j, k, l, m, or n are implicitly declared as integers, and other variables as reals.

I don't know why your compiler is simply failing when you don't have this statement -- the only reason I can see for it to do so is that you have set a compile option that requires that you include an "implicit none" statement.