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September 19, 2021

PM Ponta: No agreement with IMF and EC, gas price increase and energy industry restructuring to be discussed

Prime Minister Victor Ponta announced on Monday that the Government did not reach an agreement with the international financial partners (IMF,EC and WB) about the increase in the price of natural gas and the restructuring of the Hunedoara and Oltenia energy complexes, for which reason a letter of intent will not be signed yet, adding that the rest of the objectives are fulfilled.

According to the Prime Minister, the agreement is in force and the two issues will be discussed again in April.

‘Many of the important objectives for Romania of the new undergoing agreement are fulfilled – and this means the economic growth objectives, the budgetary discipline, which, however didn’t prevent implementing the measures on increasing the minimum wage, the pensions, the gradual reduction in the social insurance contribution by 5 percentage points, did not generate a catastrophe, but begins producing the anticipated positive effects,’ the Prime Minister told a press conference at the Palace of Parliament.

The measures left to be discussed, he added, are of a structural nature, with an important economic and social impact.

One of these measures refers to continuing the agenda of gas prices liberalisation.

‘Regarding all the industrial and non-household consumers, Romania, starting January 1, no longer has a regulated market. The household consumers and the thermal power stations are the only ones that remained on the regulated market. The request of the EC, IMF and World Bank delegation referred to a quite sudden increase starting April 1, from 53 to 62 lei per MWh, which we see as unsustainable,’ the Prime Minister showed, quoted by Agerpres.

The second point on which the sides ‘did not agree’ refers to the future of the coal-based energy producing industry, and the Government did not agree with ‘the massive and radical restructuring’ of the Hunedoara Energy Complex and of the Oltenia Energy Complex.

‘We have stated very clearly that we agree to measures for making the system more efficient, but we shall not accept measures through which this sector, essential to our energy security, to the security of the energy system and to the economic and social development of some regions, measures which may lead to the disappearance of this industry on medium and long term,’ Victor Ponta argued.

The Prime Minister mentioned that Romania’s agreement with the international financial partners is to cease in September this year.

‘The important thing is that, until then, we should see how much we have accomplished of what we have planned. At the same time, we have also taken measures which our partners did not initially accept, such as the VAT reduction for bread, the social insurance contribution reduction. They didn’t agree, we have done it and it turned out well,’ Victor Ponta added.


BNR Governor on new IMF agreement: Most important thing is to conclude the current one


The negotiations between Romania and the international financial institutions will end today, but, at the moment, for Romania, the most important thing is to conclude the current agreement, National Bank of Romania (BNR) Governor Mugur Isarescu said on Monday, within the conference presenting the quarterly report on inflation.

‘Today the last rounds of negotiations are taking place and we must wait until this evening or until tomorrow, as both we and them will issue statements,’ the BNR Governor explained.

When asked if sealing a new agreement would be opportune for Romania, Mugur Isarescu said that ‘for now, the most important thing is to conclude the current one.’

The discussions with the representatives of the International Monetary Fund will also continue at the BNR headquarters this afternoon, but within the consultations on Article IV.

The BNR Governor underscored that at the National Bank the current round of negotiations was carried out without any problems. ‘We also encountered a couple of difficult problems, but we found the middle course. We did not see any risks,’ Isarescu added.

However, in the quarterly report on inflation the Central Bank management included, in the chapter on inflation increase risks, ‘uncertainties concerning the firm and steady implementing of the set of structural reforms and measures agreed with the international financial institutions.


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