Delegation of the International Monetary Fund led by Andrea Schaechter, IMF chief-negotiator for Romania, had formal talks with government officials at the Ministry of Finance HQ about granting a new loan. They were greeted with whistles and boos by hundreds of employees of railway companies, on their third day of protests over expected layoffs.
Christine Lagarde, Managing Director of the IMF, announced during her first visit to Bucharest (July 15-16) the probability that Romania signs a new type of preventive accord with the Fund.
In his turn, Prime Minister Victor Ponta said Tuesday at Antena 3 TV that any final decision about any arrangement with IMF will be submitted to Parliament.
The Romanian authorities in the new agreement with the IMF and the European Commission (EC) want the continuation of the structural reforms, the completion of the undergoing reforms and budget discipline, Minister Delegate for Budget Liviu Voinea also said, according to Agerpres. The first talks were with Minister Liviu Voinea, ANAF officials and the top management of the Central Bank.
The talks held at the cabinet of minister Voinea were strictly technical, about the budgetary impact of the measures which the government plans to enforce this fall, and the public debt, sources close to the discussions told HotNews.
The only conclusion of the talks was the duration of the new accord – two years at most, as the sums will be discussed later, added the sources. The discussions about ANAF focused on how the Romanian plans to improve the collection of budgetary incomes, new solutions for lowering the state’s arrears to companies and how authorities will allocate money in the Health sector.
Lagarde on TVR: Romania withstood the financial crisis better than many other economies
Romania’s economy stabilised, got healthy in comparison with other European countries, said Christine Lagarde, IMF’s Managing Director, in an interview with TVR. The European and global context is dangerous, the recession persists in the euro zone, so it is prudent to sign a new accord with the IMF, Lagarde explained. Romania has some advantages, such as the talents of its people, its energy resources and a stabilised economy. Moreover, the integration in the EU is an advantage for our country, the IMF official believes. As for the European integration, “it is beneficial for Romania, the funds that are provided to Romania by European institutions and European partners should be used at the right moment and wisely in order to make structural reforms, which we believe will be of great help to Romania,” Lagarde said. The most serious risk of the present, which keeps the whole Central Europe concerned, is a possible migration of capitals, of the money placed into state bonds which would have bad consequences upon currencies across the region, also upon Romania, warns the IMF report, also confirmed by Lagarde. In this regard, the IMF plans to impose a new accord between the foreign banks that operate in the region and their governments, so the banks resume crediting operations. Such an agreement would be a continuation of a series of two arrangements between bankers and governments in Central and Eastern Europe, arbitrated by the IMF.
Visiting Petrom City
After meeting with the high state officials, Christine Lagarde visited Petrom City, the main headquarters of OMV Petrom, along with Cristian Popa, Vice-Governor of the National Bank of Romania (BNR), according to a press release.
When in Petrom City, the representatives of the IMF and BNR visited an exhibition about the history of the Romanian oil and gas industry and discussed aspects connected to the post-privatization evolution of the company. The IMF is one of the international financial institutions which, together with the World Bank and the European Bank for Reconstruction and Development, supported the privatization of the above-mentioned company. ‘OMV Petrom is a sustainable and profitable company, which invested 9 billion euros in Romania in the last eight years and has a positive impact on the economy and labour market in Romania,’ said OMV CEO Gerhard Roiss. According to the Managing Director of the company Mariana Gheorghe, OMV Petrom is the Romanian company with the best position in the classification of the first 50 companies in Central and South-Eastern Europe.
Romania’s GDP to grow 1.6 pc in 2013, 2pc in 2014
The IMF expects Romania’s economy to grow 1.6 per cent in 2013 and 2 percent in 2014, while the inflation rate is seen hitting 4.5 per cent this year and sliding to 3 per cent in 2014, informs the IMF country report posted on the website of the international financial institution. Romania’s close trade and financial linkages with other EU countries provide growth opportunities over the medium term, but in view of the recession in the euro area, they also dampen current prospects, reads the IMF report drafted after the latest reviews of the precautionary agreement with Romania. Making Romania a more attractive place to invest will spur growth, job creation, and convergence with average EU income levels, the report also notes.
GDP growth is expected to pick up in 2013 to 1.6 per cent due to a rebound in domestic demand as political uncertainty has subsided, fiscal policy is less tightened, EU-fund disbursements resume, and agricultural output returns to more normal levels. Net exports’ contribution is expected to remain negative, reflecting continued slow growth in export markets. However, the recovery is expected to continue in 2014, with real GDP growth reaching 2 per cent, the IMF considers. As employment and investment recover, potential output growth is projected to increase from 1? per cent in recent years to almost 3 per cent by 2018, with the output gap closing over the medium term.
Inflation is expected to remain above 4.5 per cent throughout most of 2013 as the recent food price shock and administrative price increases take time to dissipate. Annual headline inflation is expected to decline during the second half of 2013 to 3.6 per cent by year-end, and to ease further to 3 per cent by end-2014. The declining inflation in the second half of 2013 assumes a normal harvest and is supported by reversing base effects, the report states.