IMF evaluation: discussions participants give first conclusions

„We’re still analysing, we are still working on the evaluation”, the IMF delegation chief Jeffrey Franks told journalists. IMF and European Commission officials are not making public yet the results of the discussions with the Romanian Government, patronages and the private sector reps. But there are a few essential ideas shaping the possible solutions of the evaluation mission. The main problem would obviously be the budget spending, including salaries and state subventions. On the other hand, patronages consider to have obtained a „silent confirmation” of the fact that the taxes and levies. They also found out that the IMF was considering a 1% economic increase for Romania in 2010.

• Regarding the macro indicators, a first conclusion is that the deficit target remains unchanged for 2009. Additionally, Cartel Alfa representative Petru Dandea said that a renegotiation of the agreement cannot happen before December 6.

• An issue everybody agrees upon is that Romania would face a disaster in both the private and the public sector should the IMF decide not to send the next instalment. „We’re still discussing about the political situation and the technical aspects and it is premature to say if we can or cannot deliver the next instalment in time. Clearly, the fact that we have a politically uncertain situation makes things a bit more difficult, no doubt, but we haven’t met a final decision yet”, Jeffrey Franks declared on Tuesday.

So the good news is that it has not been decided to postpone the next instalment. The bad news is that this decision stands a chance.

• Romanian Business People Association Florin Pogonaru declared in the end of the meeting with the IMF: „What it is not said is practically ‘everything depends on you’. There are no deadlines; there are Romanian political decision factors which decide for pour lives in a way or another, including the date when the IMF money will come”.

• Moreover, a representative of the unions claims that he had asked the IMF not to award the third instalment „because we need to teach the Romanian politicians a lesson, namely that Romania faces a political crisis”, The National Unions Block leader Dumitru Costin said, quoted by Romanian press agency Mediafax.

• „Apparently the way in which the public authorities manage their budget is disastrous and all these disasters at a local level combine in deficits that we cannot pay from our revenues. Therefore, the fund and the patronages will focus on the budget spending reduction”, Florin Pogonaru said.

• „They said they understood the system through which the Government risks borrowing too much money and, in this sense, they try to convince the Government to reduce public spending so that the deficit would not increase”, UGIR1903 patronage president Cezar Coraci said.

• „Redundancies have not been explicitly discussed and this is not their business, redundancies are a consequence; it has been talked about the excessive staff in the state system and the very high incomes that exist in leading budgetary sector roles. The issue of freezing salaries has not been directly argued, but the result has, they need to be reduced by any means – reductions, freezing. But this is to be decided by the Romanian authorities”, Florin Pogonaru added. 

• „I understood there was discontent because the pensions’ system law, the salary law and the fiscal discipline law have not been adopted yet. The fund is trying to find a solution in this period, because it is clear for both them and us that the political crisis will not allow Romania to have a new government before December 6, in order to discuss these issues”, Cartel Alfa union confederation vice-president Petru Dandea declared.

Economy Ministry state secretary Tudor Serban declared on Monday, after the meeting with the IMF:

• the measures will respect the redundancy plan and will dismiss 600 persons this year and 1,000 next year, hoping that in 2012 – 2013 we’ll know to work without subventions;

• the subventions are approved by the European Commission until 2013; they did not ban the subventions, they are very flexible, but they want solutions for any problem that might arise;

• the subventions must disappear because this is the Fund’s policy. We don’t have a deadline for this;

• in my opinion, Petrosani will continue to receive subventions, alongside CFR Passengers and Infrastructure.

„It’s not the case that the budget’s incomes will increase by raising the VAT or any other taxes”, Florin Pogonaru said.

„We asked for the current taxes and levies to be maintained because in a crisis, increasing taxes would only aggravate the situation and we understood from the IMF and EU representatives’ reactions that they did not speak against this argument, so we have a silent agreement”, the Small and Medium Enterprises national Council president Ovidiu Nicolescu declared.