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March 21, 2023

New cabinet to continue agreements with Romania’s international creditors

PM designate pledges his cabinet will find the necessary financial resources to restore salaries and give back pensioners the 5.5 illegal tax on health. Ponta hopes negotiations with IMF to be successful.

Florin Georgescu, First Deputy Governor of the National Bank of Romania (BNR) nominated Public Finance Minister, stated on Wednesday evening, after a working meeting at the headquarters of USL, that the government led by Victor Ponta plans to uphold the agreements with the International Monetary Fund, the European Commission and the World Bank agreements that represents “a security umbrella,” Mediafax informs. “This is a strictly necessary condition in order to ensure Romania’s external financing in general, in order to ensure the financing of the budget deficit, of the current account, the more so since international markets are showing certain nervousness and investors display certain risk aversion following some developments, uncertainties in the EU countries area,” Florin Georgescu stated. Commenting on the decline of the national currency, Florin Georgescu said that things will grow calmer starting on Monday, provided Parliament approves the Ponta Government and its governing programme. “The exchange rate is free, it is set on the basis of supply and demand on the foreign exchange market. There is a certain volatility in relation to what is happening at European, international level, there are things that concern risks, uncertainties in the area of some EU countries,” Florin Georgescu added. Georgescu pointed out that a budget rectification is needed in order to hike salaries to pre-austerity levels, since it entails the modification of the deficit. Also, he underlined that in 2012 Romania’s deficit is below 3 per cent of GDP, which is an older commitment meant to lower the deficit which was much higher in previous years. Referring to the statements according to which there are a lot of RON-denominated and forex-denominated money in the country’s treasury, money that could be used to solve other social demands, Florin Georgescu added that the money are within the Treasury’s account, which represents the state’s reserves. He added the RON 5 bln mentioned represents taxes but that the sum drops as time passes because expenditures for public, central and local institutions, and for the payment of pensions, are taking place. “To take a snapshot at one point is incorrect without seeing the dynamic of things,” he said, pointing out that in Romania the deficit is present each month and the state spends more than it collects every month.

Ponta: Neither Boc nor Ungureanu earmarked money for salaries

Designated Premier Victor Ponta stated yesterday that he has noticed, after Florin Georgescu started “to look through the papers,” that neither the Boc Government nor the Ungureanu Government earmarked money for restoring salaries to their pre-austerity levels. Ponta stated that the situation is “much worse” than presented. On the other hand, he claimed that the government “did not abstain from earmarking money for the political clientele, particularly for PDL’s local barons,” the criteria being exclusively political.  “At this moment those funds are not included in the budget,” Ponta said, adding that the resources have to be found. The designated Premier stated that the money will be found because “there are places from which to cut” even though “some PDL barons, some UDMR Presidents might get upset.” In his turn, BCR chief economist Lucian Anghel stated that it is possible for public sector salaries to return to their 2010 levels and that a budget deficit hiked up to 3 per cent will depend on how the economy performs. “Finding long-term financial resources and being convincing in its negotiations with the IMF will be a very difficult task for the government,” Anghel underlined, financiarul.ro shows. Government spokesperson Dan Suciu pointed out that the data analyzed by the government shows that the economy has the capacity to ensure budget revenues for a salary hike starting in the second half of the year, budget revenues resulting from economic activity. Outgoing Finance minister Bogdan Dragoi reacted to Ponta’s statements, saying later on yesterday that the money for restoring salaries and pensions was already provided to the budget. The source was represented by the people leaving the public system, which allowed authorities to save RON 600 M, along with other sums resulting from collected incomes.

Talks with IMF, EC and WB to start today

Nominated Finance Minister Florin Georgescu stated yesterday that talks with the IMF, WB and EU will start today, being set to center on the letter of intent. In what concerns the lack of budget funds for restoring salaries, Georgescu avoided an answer and stated that the figures are to be found at the ministries. Ponta also stated that he wants to issue a positive signal, since judging by preliminary talks there are high chances that the negotiations with the IMF, WB and EC will end well on Sunday evening or “very early” Monday morning, underlining that restoring the salaries is a measure included in the governing programme. “I’m optimistic,” Victor Ponta concluded.


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