IMF Mission in Bucharest

A joint mission of the IMF, the European Commission and the World Bank is in Bucharest until February the 5th, to assess the precautionary agreement signed with Romania in 2013. On the one hand, according to the IMF, the talks with the Romanian authorities will focus on recent economic developments, on steps to restructure and improve the efficiency of state-owned companies, to prioritise and more strictly monitor public investments, to check arrears, and offset the drop in budget revenues. In addition, the IMF wants to make sure that the budget deficit remains within the 2.2% of the GDP range targeted in the loan deal.

România Internațional, 21.01.2014, 15:13

A joint mission of the IMF, the European Commission and the World Bank is in Bucharest until February the 5th, to assess the precautionary agreement signed with Romania in 2013. On the one hand, according to the IMF, the talks with the Romanian authorities will focus on recent economic developments, on steps to restructure and improve the efficiency of state-owned companies, to prioritise and more strictly monitor public investments, to check arrears, and offset the drop in budget revenues. In addition, the IMF wants to make sure that the budget deficit remains within the 2.2% of the GDP range targeted in the loan deal.

On the other hand, Romanian business people want transparency in the Government’s negotiations with the IMF, and push for measures to reduce the tax burden, such as an exemption from taxes on reinvested profits, more funding for programmes generating jobs, and lower salary taxes. The General Secretary of the Romanian Business People’s Association, Cristian Parvan:

Cristian Parvan: “We believe that, in these negotiations, in order to strengthen the economic growth prospects for this year, the Government should discuss a number of measures and persuade the troika that they are useful. These include the scrapping of taxes on reinvested profits, which is a long-standing problem and has never been properly understood. That would enable Romanian businesses to achieve fiscal consolidation, as international corporations do in Romania. Measures should also be discussed that would increase the funds allotted for schemes fostering the development of the business environment.”

Prime Minister Victor Ponta says taxes on reinvested profits are likely to be scrapped as of July 1st, given that last year things went well in terms of the economic growth, the budget deficit, the EU fund absorption and the investments. The Liberal Democrats, in Opposition, have called on the Government to ensure that the agreed budget deficit is met, by encouraging economic growth and fighting tax evasion, instead of introducing new taxes and charges.

The precautionary loan agreement signed by Romania with the IMF, the European Commission and the World Bank is worth 4 billion euros and will be valid for 2 years, with Bucharest only resorting to that money in case of a major crisis.