Executive wants two-month extension of stand-by agreement with IMF

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Finance Minister Daniel Chitoiu says Romania will sign new agreement with the Fund and a new review mission of the delegation of the international institution is expected in July.

Following the talks taking place at the Ministry of Finance on Saturday, the Government has asked the International Monetary Fund (IMF) that the evaluation of the stand-by agreement was discussed by the institution Board in May in order to give it time to fulfil some of the outstanding commitments as well as conditions with respect to the budget evolution. A new review mission is supposed to come to Bucharest in July.

The meeting with the IMF delegation headed by Erik de Vrijers lasted until after midnight on Saturday. Finance Minister Daniel Chitoiu, the Minister Delegate for Budget, Liviu Voinea, the Labour Minister, Mariana Campeanu, the Minister of Communications and Information Society, Dan Nica, as well as other ministers with competence relevant to the IMF evaluation participated in the final talks. The agreement sealed in the spring of 2011 and which was supposed to come to an end in April 2013, with the last review meeting on the IMF Board, will most likely finalise in July. PM Victor Ponta confirmed the fact that he has asked the IMF for a two-month extension of the current agreement, explaining the reason he had done it was that he needed more time to complete structural reforms involving companies such as Oltchim, CFR Marfa or Transgaz.  ‘I asked for an extension in order to complete the structural reform part and not to have to do everything hastily, like it happened with Oltchim. We are going to finalise the listing of Transgaz, we’ll make headway on the Oltchim restructuring procedure, we may also engage in discussions regarding a new auction, and we will start the procedure for CFR Marfa. It is the IMF’s decision, though. If we complete this agreement in good conditions, we will immediately start negotiating a new precautionary one,’ Ponta said. Mediafax quotes sources as saying they do not exclude that the new agreement may be approved by the IMF Board in September, which would also mean a formal conclusion for the agreement that began in 2011.

Like two years ago, Romanian authorities do not want to have a pause between the two agreements. Romania will conclude a new agreement with the IMF, Finance Minister Daniel Chitoiu told Money.ro. Chitoiu is optimistic in that respect, especially given the fact that authorities appear to manage to do this year what could not be done in the past years, especially 2012. Moreover, a new time-table has been agreed upon with the experts of the three international institutions present in Bucharest for fulfilling the set objectives. In what regards increasing the level of collection of taxes and charges for the state budget, Chitoiu expressly assumes this particular requirement. The reorganisation of control structures becomes one of the biggest challenges of his term as Minister of Finance. The first step is the checking and taxing of the millions hidden from the eyes of the Tax Authority by the rich tax evaders of this country.

Not a ‘respite’, but rather a ‘term adjustment’

The extension of the agreement between Romania and the IMF is not a ‘respite’, but rather an ‘adjustment of terms’ in conformity with the Romanian law as well as with new elements having emerged in the meantime, Communications Minister Dan Nica is quoted by Hotnews as having said at the Ministry of Public Finance on Saturday. Nica also said the IMF and the European Commission had appreciated the way in which Romanian authorities had fulfilled the obligations assumed by the Government under the letter of intent.

Lay-offs in state companies registering loss

State-owned companies that make a loss and that cannot start making profit will be hit by lay-offs, says Minister Delegate for Energy, Constantin Nita, who also participated in the talks with the IMF. Nita answered a question from the press on whether energy companies would also be subject to lay-offs that, should any losses be observed, they obviously would be. ‘We undertake it to introduce private management to several important enterprises – Romgaz, Nuclearelectrica and Transgaz. We undertake it to start privatisation procedures for Electrica,’ Nita said. The Executive also promises to finalise the framework for paying residential heating and electricity aid by the end of April. ‘We will finalise the law on the vulnerable consumer by the end of April. Shortly, we will also have the national employment plan ready, especially for young people,’ said Labour Minister Mariana Campeanu.

BNS: Extension of agreement – time-out for Romania

The extension of the agreement with the IMF is, in reality, ‘time-out for Romania’, said the President of the National Unions Block (BNS), Dumitru Costin. The union leader noted that, in his opinion, the extension of the agreement with the IMF in reality meant that the IMF gave Romania two more months to rethink its policies, support them and come up with a new battle plan. ‘Last year was a wasted political year for Romania, a year when we were focused on all sorts of different priorities,’ Costin further said.