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TOUGH NEGOTIATIONS WITH THE IMF 04/05/2010
(2010-05-04)
Last updated: 2010-05-05 13:11 EET Print
After the first week of talks with representatives of the Finance Ministry, banks, businesses and unions, the news coming in is fit to give Romanians the shivers. Rumors are flying, such as rising taxes to raise budget revenues, freezing salaries and pensions, or layoffs in the public sector to reduce expenditure. The first official news came from Finance Minister Sebastian Vladescu, who confirmed that it was possible that Romania would not recover from the economic crisis in 2010; he even said Romania’s economy might shrink, even though at the beginning of the year the IMF believed it would have a 1.3% growth, later revised down to 0.8%. Vladescu said solutions were being sought to increase budget revenues, which were below expectations in the first months of the year. Vladescu said that raising taxes was unanimously rejected by the government, the National Bank governor, and businesses, who believe that such measures would not result in growth, but could slow down the economy to the point of collapse. Another piece of official information came from Transportation Minister Radu Berceanu. He made a proposal to IMF experts to increase the budget deficit ceiling set by the Fund above the 5.9% of the GDP initially set, in order to make investments in the infrastructure. The minister himself told us what the response of the IMF was: “The answer was on the lines of: you have several choices. Either you raise revenues to feed the budget in order to make investments, or you cut the wanton spending you have now, and invest from those savings. You also have the possibility of bringing private capital into the formula". These tough talks are widely commented on in the press. The daily Gandul writes: ‘The IMF doesn’t trust the Boc government’, saying that Berceanu’s proposal to raise the deficit ceiling got a loud NO as an answer. ‘The government uses for the first time the word ‘recession’’, writes Ziarul Financiar, saying that the chain of negative readjustments of economic growth figures in 2009 will repeat itself in 2010.

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