According to the letter of intent signed with the IMF, the Romanian authorities committed to an economic growth of 1.5 pc and a budget deficit of 4.4 pc of GDP in 2011.
Under the EUR 3.5 bln-precautionary agreement (the money can only be accessed in emergency situations), signed with the International Monetary Fund (IMF) this spring and set to run for two years, Romania committed to enforce a series of austerity measures. Thus, in an Appendix to the letter of intent released, on Wednesday evening, alongside the Memorandum of agreement between the two parties, the Romanian Government committed to prevent the extension of management contracts currently existing at the state companies beyond January 1, 2012, and the selection process will be initiated in August, being open to international specialists as well. The process will envisage not only CEO positions, but also those of financial directors, and current managers can compete for the job. The new private managers will be granted full prerogatives to operate the changes they see fit.
The 154 companies monitored under the Agreement will have to lay off nearly 7,000 employees by late September, at the latest, compared to staff numbers at the end of 2010, the document further reads. The most severe staff cuts will be operated at the National Railway Freight Transport Company “CFR Marfa” S.A. – 3,000 positions, to be axed by the end of July, while 1,000 employees are to be laid off, by the same deadline, from CFR Calatori. Yesterday, CFR Marfa employees from Arges staged a protest on the company’s premises, disgruntled with the fact that 50 of the 100 employees in the county had been given a notice, with the criteria motivating the lay-offs, as well as with the severance pays they were offered, Realitatea.net reports. The laid-off employees stated that they would go on coming to work until July 7, the day their notice expires, and would subsequently sue the company, as, in their opinion, the sackings were abusive.
600 positions will be axed from the Romanian National Roads and Highways Company (CNADNR) by mid-July, while 300 employees from Termoelectrica are to be laid-off by the end of June. The Turceni Energy Complex is to let 200 employees go by late September. At least 70 administrative positions will be cut from the “Posta Romana” company by the end of June, according to the document, which also stipulates the shutdown of approximately 900 post-offices by the same date.
The document further indicates that the Romanian authorities estimate an economic growth of 1.5 pc for 2011 and a growth of 3.75-4 pc in 2012, backed by solid exports and a gradual recovery of internal demand. “The inflation rate is higher than our estimates, because of hikes in food and energy prices. These factors, alongside the need to hike administered prices, will maintain the inflation rate above 5 pc for the rest of the year, making the meeting of the central bank’s inflation target by the end of 2011 unlikely,” the document reads.
RATB to merge with Metrorex
The Government also committed, in the letter of intent, to set up, by late August, a metropolitan transport authority in Bucharest, by merging the Bucharest Public Transport Authority (RATB) and Metrorex. The project of founding a Metropolitan Authority has been around for three years and, although the authorities have been working on a bill to this purpose, it is yet to materialize. The new body was to be allotted funds both from the state budget and from the Bucharest City Hall’s budget.