BUSINESS

Gov’t, IMF decide to “aggressively” restructuring CFR Marfa

The Government agreed with the International Monetary Fund (IMF) to decide by the end of the year whether to let out or shut down over 700 km railway lines and to apply the same procedures next year for another 900 km CFR railway lines in order to save RON 70 million per year. The figures are included in the Letter of Intent agreed on with the IMF during the negotiations held this month. In June 2011, the former Government decided to let out about 1,000 km of railway lines and close some other 1,000 km of railway segments, predicting that the action will generate a saving of RON 109 million in the budgets of CFR companies, this measures being taken together with the IMF. According to CFR data, the total length of railway lines was 20,210 km in 2009, with 17,691 km public railway infrastructure and 2,519 km private railway infrastructure.
Furthermore, the Government and the IMF decided that CFR Marfa should be “aggressively” restructured, by cutting personnel costs, selling used freight cars for scrap and stopping deliveries to the clients incurring debts to the company. “The company continues to accumulate arrears, and has suffered losses from exploitation in the first nine months of the year,” the document says. According to the letter of intent, the privatization of CFR Marfa is to be completed in May 2015. CFR Marfa will make redundant some of its employees in 2014, and the laid-off people will be given a monthly income after the termination of their labour contract, according to the emergency ordinance drawn up by the Government.
Government’s promise: Budgets of companies will be ready in a month, at latest
The government pledged to the IMF that the budgets of state companies for next year will be submitted to the Ministry of Finances within a month at latest from the approval of the state budget, while the budgets of the main railway operators that have financial difficulties due to be submitted earlier. On most occasions, the budgets of all state companies are submitted to the ministry and approved by the government even as early as during the summer of the respective year.
The draft budget was due for approval by the government yesterday and is scheduled to be voted by the Parliament early in December. The government once again promised the IMF and EC that it will take all the measures to prevent the adoption of the legislation of personal bankruptcy and of other draft laws on debt recovery, on grounds that they would “undermine” the discipline of loan repayments.
The Executive also promised the IMF that local authorities will be allowed to increase the property taxes paid by natural persons, in order to lower the risk of accumulating arrears and registering a deficit at territorial level.
Another promise included in the letter of intent was that, by the end of December, the Executive will send in Parliament a new draft law that will regulate the insolvency procedure, with clearer provisions that will support the timely rescue of viable businesses and will allow the “rapid exit” of non-viable companies.
In a different move, the expenses with salaries in the public sector will increase by RON 1 bln as of next year, but half of this sum will be allocated in H2 and depends on the evolution of incomes to the budget compared to expectations, in line with the commitments taken by the government to the IMF.

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