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December 4, 2022

Negotiations with IMF, EC and WB end successfully, Fin Min Georgescu says

The payment of VAT when cashing-in bills, extending the timetable for privatizing state-owned companies and a series of measures meant to stimulate job creation were among the measures agreed. For the time being lowering the VAT to 9 per cent for staple foodstuffs was not accepted.

Finance Minister Florin Georgescu stated on Saturday evening that negotiations with international partners – the European Commission, the IMF and the World Bank – on the commitments that Romania took have successfully ended. Likewise, the letter of intent and the documents negotiated contain targets for the next three months, Georgescu underlined. He also stated that during the negotiations the funds needed to restore nominal public sector salaries to their June 2010 levels were ensured, as well as funds for the payment of the sums “illegally collected from pensioners.”
At the same time, the IMF agreed with the payment of VAT when cashing-in bills, extending the timetable for privatizing state-owned companies and a series of measures meant to stimulate job creation and postponing the co-payment in the medical system, Mediafax reports. “The most important thing in the fiscal policy area is the fact that we convinced the representatives of international financial institutions that the payment of VAT when cashing-in bills will not have a negative impact on the budget, not even on the short-term cash-flow. We received their agreement with this measure, without being asked for compensatory measures on the revenue side; the measure will be included in the government ordinance on modifying the fiscal code, an ordinance that will be adopted in August,” Liviu Voinea, secretary of state within the Finance Ministry, stated for hotnews.ro.
At the same time, IMF, EC and WB representatives pointed out to the MPs that are members of the budget-finance commission that for the time being they do not agree with lowering the VAT to 9 per cent in the case of staple foodstuffs or with the three-stage progressive taxation of income, since that would lead to a budget deficit of over 3 per cent of GDP.
Fiscally-wise, important measures for stimulating the business environment, for creating jobs and for developing technological innovation were agreed.
Likewise, the Finance Ministry pointed out that there will be no layoffs in the public sector, that the economic growth will stand around 1.2 per cent in 2012, the annual inflation rate will stand at 3.5 per cent at the end of the year and the budget deficit stands at 1.85 – 2.2 per cent of GDP, as already agreed during the previous round of negotiations. Former Finance Minister Gheorghe Ialomitianu pointed out after meeting the officials that he expects the economic growth level to drop starting this autumn.
Private managers for part of state-owned companies by year’s end
Florin Georgescu also underlined that Romania has taken the commitment to privatize Oltchim by mid-September, using a strategic investor, “which will put the plant’s and nearby Arpechim’s potential to good use.” The government is changing the order in which Oltchim’s privatization will take place, so that the procedure will start with the sealed bids on September 14, followed, if need be, by the open bids. The government announced that the tender is open to any interested investor.
Economy Minister Daniel Chitoiu stated in his turn that Electrica Furnizare will have a private general manager by the end of September. Likewise, Romgaz, Transgaz and Transelectrica will have private managers by the end of this year and Hidroelectrica will have a private management and will be listed the moment it comes out of insolvency. He added that the deadlines for privatizing and listing state-owned companies have been extended. Thus, the privatization of Transgaz and the listing of Oltenia and Hunedoara power centres will take place in September. Electrica Distributie and Electrica Furnizare will be listed early next year.
On the other hand, the Transportation Ministry took the commitment to privatize CFR Freight by December. The Roma­nian state could also privatize Tarom if the offer to sell 20 per cent of the national airline’s shares is not attractive. “Of course, the timetable is clear for the 20 per cent. The IMF sought that all measures have a very precise timetable, very precise deadlines, and cost estimation everywhere,” Septimiu Buzasu, secretary of state with the Trans­portation Ministry stated on Saturday. He added that several important companies from the Middle East and Asia have shown interest in privatizing Tarom.
Officials, open to proposed measures but impact
studies have to be made
Eugenia Barna, chairman of the budget commission, stated on Friday that “impact studies” have to be made by autumn, when the 2013 budget is made, for the economic measures that the government proposed to IMF officials, the IMF delegation being open to the government’s proposals. “For the time being nothing was approved, for the time being all of the government’s proposals are being discussed and the decision will be taken this autumn,” Eugenia Barna added. Barna also pointed out that IMF and EC officials noted that the budget execution was good in the first six months of this year, the government being within the parameters established.

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