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March 4, 2021

PM Victor Ponta: Not giving up on IMF agreement ahead of schedule

Despite the fact that the assessment of the IMF agreement, scheduled for this September, will take place in Brussels, the Romanian government is giving assurances that its relation with international financing bodies is within the agreed parameters. Asked by journalists whether the Romanian government is considering a cancellation of the current agreement with the IMF, the EC and the World Bank ahead of schedule, PM Victor Ponta answered: “No! Same answer for the question about the deficit, no! Apart from the 0.2 per cent we have asked for military spending, spending for the National Defense Ministry. So no, apart from the 0.2 per cent, we don’t need that. Our problem at this moment is that we haven’t really spent the money, not that the deficit is not enough for us.”
The representatives of the government and of the National Bank of Romania (BNR) are going to Brussels this week in order to assess the agreement with the IMF, the EC and the World Bank, the talks taking place for the first time outside the country and without the participation of the Presidency, political parties and unions.
The decision had to do with the internal context of the elections campaign, both sides understanding that the talks should not be used for political purposes, being rather technical discussions. As a rule the IMF does not get involved in internal politics during election campaigns, but it was necessary for this assessment mission to take place, government sources stated for Mediafax.
Unlike the missions in Bucharest, which used to last anywhere from ten days to two weeks, the talks in Brussels will be focused and will span four days, from Tuesday to Friday.
The IMF delegation will be led by Andrea Schaechter, the EC delegation by Istvan Szekely, and the World Bank delegation by Elisabetta Capanelli, country director for Romania and Hungary.
The Romanian government will be represented at ministerial level. The BNR will be represented by BNR Governor Mugur Isarescu, First Deputy Governor Florin Georgescu and Deputy Governor Cristian Popa.

In the first two days the negotiations will take place at technical staff level and will concern solely the budget execution registered so far and the second budget rectification this year, which includes the lowering of the social contributions (CAS) by 5 percentage points starting on October 1.
The talks at ministerial level will start on Thursday, September 18, and will include among the participants Finance Minister Ioana Petrescu, Health Minister Nicolae Banicioiu and Transport Minister Ioan Rus. The final day will feature a meeting between BNR’s executive leadership and the representatives of the IMF, EC and World Bank, followed by an ample talk on the budget rectification, the draft budget for 2015, energy taxes (royalties) and the forecasts on the evolution of revenues collected by the National Fiscal Administration Agency (ANAF).
Another important issue on the final day’s agenda consists of energy sector reform, Energy Minister Razvan Nicolescu set to take part in that meeting. The Romanian authorities plan to postpone by two years the natural gas price liberalization timetable for household consumers, a timetable negotiated as part of the agreement with the IMF, EC and WB.  The IMF mission left Romania at the end of July without giving its assent on the measures promoted by the government, the main discussion concerning the lowering of the CAS by 5 percentage points, even though that measure was moved forward from July 1 to October 1.
The joint mission pointed out during those talks that the authorities’ plans are unrealistic, especially from the point of view of the budget execution registered up to that date, but also in what concerns the budget for 2015, considering that the budget deficit has to be cut down again, from 2.2 per cent of GDP in 2014 to 1.4 per cent of GDP in 2015 while simultaneously raising defense spending.

FinMin: the second budget revision; deficit target does not change
The Romanian authorities will discuss this week, in Brussels, with representatives of international financial institutions, about the second budget revision, structural reforms and the trend of the economic situation, Minister of Public Finance Ioana Petrescu said on September 15. Answering a question from journalists, the finance minister said that that the budget deficit target agreed for 2014 would not change.
‘We will have discussions with representatives of the International Monetary Fund /IMF/, the European Commission and the World Bank in principle on the second budget revision, on the structural reforms that we consider with the IMF and which are in the letter of intent and, basically, on an update regarding the current economic situation relative to July, when the latest IMF technical mission was to Romania,’ said Ioana Petrescu.

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