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January 29, 2022

Budget according to IMF stand

Finally, the state budget was voted for by Parliament last week, after hot discussions in the plenum. Debates which were many times hilarious, the great majority of the amendments proposed in the specialized commissions being rejected. According to the media, PM Emil Boc promised also the opposition MPs an amount of money similar to that which was granted to those in power for the constituencies which voted for them. Wherefrom also the vote in favour of the state budget much above expectations: 192 votes for, 138 against.

“The year 2010 will be better than 2009, but with a small economic growth which will prepare a future economic relaunching. (…) 2010 is the year when we get out of the crisis and the year when the economic growth is prepared, the 2010 budget is an economic relaunching budget and when we get out of the crisis,” PM Boc told the Parliament, stressing that the budget was built in such a way to make sure that the pensions and salaries can be paid at the established value.

“We are not here to sell illusions to the Romanians,” the Premier said, pointing out that he has chosen to not increase the salaries and the pensions, although any Premier would like this, in order to not induce illusions to the population.

Unfortunately, the situation is not as bright as PM Boc presented it. Far from being a relaunching budget, the 2010 budget is an austere one, and the money for army, education, investments is little. As for the pensions and salaries of the state employees, they largely depend on the continuation of the IMF, WB and EC agreement.

The finance minister Sebastian Vladescu has set up a very popular team, hoping that the measures promoted by him and the ministry that he manages will be more easily “swallowed” by the public at large. For that purpose, he attracted Andrei Gheorghe and Dan Bittman, the first a show-man, the second being a member of “Holograf” formation, as members of his team. The first in the media relation team, the other public relations adviser. We don’t know how the two will handle the matters, because obviously it was not the financial aspect which mattered when they accepted the posts.

Unfortunately, the “public” will not be very happy with the measures announced by the Finance Ministry.

On the one hand we refer to layoffs regarding around 100,000 jobs from the state sector. In the electoral campaign, this issue was steadily avoided. All that was mentioned was the restructuring of the activity in the public sector, but no more. Not late ago was launched the idea of laying off 80,000 posts, but the finance minister Sebastian Vladescu has recently overdone… 100,000. It is obvious that IMF’s requirements to cut the expenditures are imperative. The rail workers, the civil servants, the education sector (15,000 posts), etc., are in stand-by. The unemployment rate is expected to reach 10 per cent soon.

The state is overstaffed and spends too much. The economy continues to be in crisis. The population steadily decreases, while the number of pensioners is growing up. The economic fall may continue, or a small growth may be registered, but certain is the fact that the decrease of consumption will be topical. The crisis of liquidities may increase.

On another hand we see optimism. The IMF mission comes to Bucharest starting on January 20, scheduled to discuss with the authorities until January 27, while the rating agencies are ready – so the word goes – to improve Romania’s rating if the stand-by agreement continues, and Bucharest will access installments three and four of EUR 1.5 bln and, respectively, EUR 800 M.

Even anticipating a positive settlement in this respect, the fundamental problems remain. Education meets with major problems, the schools from the countryside being the most affected by the lack of funds. The 4,000 schools anticipated by Tariceanu Government do not have many chances to come up, although PM Emil Boc voiced his wish to build them up. There are no funds. Defence does not receive money in compliance with NATO standards. In terms of infrastructure it is even worse, any investment meaning to give up other projects already announced.

Although Prime Minister Boc anticipated at the end of the past year that he would allot at least 20 per cent of the budget to the public investments, it seems that not any RON will go to the new projects. Thus, the present Cabinet Boc puts an end to the new investment projects, preferring to finance the old ones, some of them started in the ‘70s, as the minister of economy Adriean Videanu has recently acknowledged.

Thus, our budget matches the possibilities. The international financial crisis offers few chances of internal reconstruction. On another hand, Boc Government has not come out with a viable offensive against the crisis. Criticized by the Opposition, the present Cabinet has not been very keen to combat the financial crisis and its effects. Or it did not know how to do it. Anyway, for the Romanians the hard time hardly begins. Even if they have a budget for 2010!

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