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May 6, 2021

Schaechter, IMF: Ongoing structural reforms in healthcare, energy and transportation

IMF delegation leader Andrea Schaechter, who is currently in Bucharest to discuss the next programme involving Romania, stated yesterday that the government set out multiple objectives that include maintaining macroeconomic stability countrywide and continuing structural reforms in the health, energy and transport systems, Agerpres reports. “Our mission is connected to the new agreement requested by the Romanian government and is twofold: firstly, we must continue and expand on the successful results of the first two programmes, namely, achieving a level of macrostability at country level; this means we must maintain and, if possible, expand on the advantages of the current situation – in just a few years, discrepancies have been faded out”, Schaechter said at the start of the meeting between the common IMF delegation, the World Bank and the European Commission and the Budget Commission of the Chamber of Deputies.
She added that the country has benefited from these signs of progress and this is visible in the lower interest rates with which Romania has taken out loans, all of which point to a higher level of confidence from investors. “We are about to finalise discussions with the government, the ministries in question, MPs, the financial sector, and representatives of the business environment”, Schaechter also said.
On the other hand, Prime Minister Victor Ponta mentioned on Monday that negotiations for a new agreement with the IMF were concluded and the outcome is going to be announced tomorrow, he said within a statement held at Victoria Palace, after the meeting with IMF representatives, Agerpres reports. Premier Ponta announced that he will submit to the Parliament in September, at the beginning of the session, the provisions of the new agreement with the IMF, so this document is not just a decision of the government, but of all the responsible parties, regardless of the “usual irresponsible people” from Parliament and Cotroceni.
Ponta added that the new preventive financial agreement will also include a provision regarding the privatisation of CFR Marfa, which is very good for Romania, but very bad for “all those who rejoice at small things.” CFR Marfa will have a private manager and the privatisation will resume if the current procedure will not be successfully concluded “because of those who are making parties of their own now,” PM Victor Ponta stated
Asked by journalists, at the conclusion of talks with the IMF, if there is a mention about the privatisation of CFR Marfa in the new agreement, the premier answered that such mention exists, along with other privatisations like those of Hidroelectrica, Nuclearelectrica or Romgaz.
At the same meeting, Public Finance Minister Daniel Chitoiu said that the excises on alcohol will increase from 750 euros/hectolitre to 1,000 euros/hectolitre and excises will be introduced on some luxury products. The measure is meant to compensate the negative budgetary impact that might be determined by the VAT reduction in bread, from 24 per cent to 9 per cent, and the additional revenues from the excises are estimated at RON 300 M by the end of 2013. According to the Finance Minister, excises will be introduced on gold and gold objects, watches, jewellery, cars with engines of over 3,000 cubic centimetres, yachts and weaponry used by natural persons, According to Mediafax. Furthermore, the vehicles obtained through a divorce will no longer be exempted from the payment of the environment stamp, the new car tax, as authorities found that there are used cars purchased from states of the European Union in co-ownership, but the buyers make the partition at a notary public before registering the vehicles. According to the Executive, the same tax-avoidance mechanism can be used in the case of new vehicles, i.e. buying them in co-ownership regime and then partitioning the ownership before registration at a notary public.
ING: The new agreement will be signed in October, after the Ecofin meeting
ING Bank explains in an analysis that it does not believe that the 4.30/EUR threshold will be reached on a short term, but the RON could be seen reaching the 4.35/EUR mark in a few days, HotNews informs. “The IMF/EC visit ends these days, with public signals showing that the agreement will be most likely signed after the Ecofin meeting scheduled for October this year. We doubt that it might have a significant impact on the RON, but we see an exchange rate EUR / RON under 4.30, most probably around 4.35. Recent data show that the adjustment of the current account visibly accelerated this year. The external deficit was almost 4 pc of the GDP in 2012 and recent data suggest that it might reach 1 pc of the GDP this year. It would not take a very big miracle to see a balanced account at the end of the year,” reveals the analysis.
IMF’s conclusions
Members of the Committee on Budget, Finance and Banks of the Chamber of Deputies have, on Tuesday, a meeting with the delegation of the International Monetary Fund (IMF), World Bank (WB) and European Commission (EC). The delegation of IMF, WB and EC also met with President Traian Basescu and with Prime Minister Victor Ponta.
An IMF team, headed by Andrea Schaechter, is on a visit to Romania, in the period July 17 to 31, for talks. IMF – EC – WB delegation will present the conclusions of these meetings today.

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