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| The IMF Mission in Bucharest 25/01/2011 |
| (2011-01-25) |
| Last updated: 2011-01-26 14:22 EET |
Bucharest has received from the IMF more than 12 bn euros from a loan worth more than 13 bn. The total assistance package agreed upon by the world’s important financers stands at 20 bn euros. The head of the Fund’s mission to Romania, Jeffrey Franks recently said that the institution’s biggest disappointment, after 2 years since the start of the agreement with Bucharest, was the fact that the economy had not yet resumed its growth.
It was the first time a high-ranking official involved in the agreement admitted that the project failed to help Romania emerge from the crisis. However, Jeffrey Franks voiced his optimism over the 2011 economic growth. He warned, however, that it was necessary for the reform to be stepped up in certain sectors, such as the administration.
President Traian Basescu also said that layoffs in the budget sector must continue for several years, until the number of public employees narrows down to 900 000, instead of 1.29 million, as is the case today. A second objective of the IMF mission in Bucharest is to negotiate the terms of a new agreement between Romania and the World Bank.
This will most likely be a precautionary deal, meaning that the money allocated for Romania can only be accessed in case of emergency. The new agreement could extend over a period stretching between 9 months and 3 years, but most likely it will have a 2-year validity.
Romania will obtain a sum that is significantly lower than the amount of the current agreement, but one that is higher than the country’s contribution to the Fund, that is about 1.2 bn euros.
Experts say that the benefit of such an agreement is that it involves no interest payments, but only the payment of a commission for the sums that can be accessed.
Talks will focus on issues such as the restructuring or shutdown of state companies that report losses, the elimination of budget arrears, health care reform, the simplification of taxation bureaucracy and carrying on pension and state salary reforms.
Analysts believe that the signing of such an accord demonstrates that things are going in the right direction in Romania. They claim that such an agreement would reduce populist tendencies which, especially in electoral times, drive the administration in Bucharest towards unsustainable economic measures.
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2025-04-03
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