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October 23, 2021

Economists: New agreement with IMF, unavoidable

Financial analysts claim that renewing the agreement with international financiers is a must. Most consider this is the advisable strategy, ‘Adevarul’ reports. The idea of a new agreement for a loan is already being accredited in the public sphere. Some economists argue this is not the best approach. “The present agreement is still in progress, yet, at Cabinet level, the idea of a new agreement is already explored. Or, the focus should be on restructuring expenses, otherwise, the effect on investors may be the exact opposite,” investment consultant Doru Lionachescu, managing partner at Capital Partners, says. Economic analyst Ilie Serbanescu is persuaded the new agreement will not be a precautionary one, but yet another stand-by agreement. “The state is bankrupt, pensions and wages are paid out of loans. More than half of the loan will have to be paid by the selfsame state. Where are they going to find the money, under present market conditions?” the analyst wonders. Economist Aurelian Dochia argues that, in the present international context, it is hard to believe that an economy as the Romanian one is will be able to recover without external support. At the same time, Dochia mocks the apparently “forceful” position adopted by Hungary, which claims it intends to renounce the IMF agreement, although it hasn’t done so yet. The analyst Liviu Voinea, executive of the Applied Economy Group (GEA), adopts a more nuanced approach. The latter thinks that the Government will sign a “precautionary” agreement with the IMF, complemented by funds from the EU, respectively, the European Commission. The chief economist of ING, Nicolaie Chidesciuc, envisages, in his turn, a “precautionary” agreement, without taking actual loans. A “precautionary” agreement imposes, just like the stand-by one, the observing of certain terms set by the financier, without the state (in theory, the central bank) benefiting from financial support. At present, three states are benefiting from a flexible credit line: Mexico, Columbia and Poland.

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