The IMF Assessment Mission in Bucharest Comes to an End

IMF mission to Bucharest ends after two weeks of intense talks.

România Internațional, 30.01.2013, 13:39

The joint IMF, European Commission and World Bank assessment mission to Romania has ended, but the head of the IMF mission to Bucharest, Erik de Vrijer, says the progress made by Romania is not sufficient. He will forward to the IMF board the request of the Romanian authorities to extend the ongoing precautionary agreement by 3 months, because Romania failed to comply with a number of commitments and still has to implement a number of structural reforms.

The Romanian government has pledged to take a number of measures by the end of June, including reducing arrears, making state-owned companies more efficient, privatising the Freight Division of the Romanian Railways Company, listing 15% of the shares in the Transgaz company on the market and starting listing procedures for the newly set up Oltenia National Energy Company. Efforts will also be made to step up the appointment of professional managers at the helm of public companies. The head of the IMF mission says economic growth is not possible without comprehensive reforms.

The representatives of the country’s international lenders have also pointed out that Romania can no longer rely on massive inflows of direct foreign investments to boost its economic growth, which is estimated at 1.5% in 2013. Erik de Vrijer has insisted that Romania has to rely instead on its own efforts to obtain economic growth and that there are promising opportunities to achieve that. One solution is for the government to intensify efforts to obtain European funds for infrastructure projects and not only. But even this is not enough, says the head of the IMF mission, with the country’s international lenders being often disappointed in the past with the low level of European funds absorbed by Romania. Which is why, says de Vrijer, the focus should be on such sectors as energy and transports, which can bring about economic growth.

Erik de Vrijer also referred to Romania’s 2013 budget, which he considers balanced in terms of expenses and revenues. Budget revenues will allow for an increase in pensions by 4%, an increase in state employees’ salaries to the level prior to the 25% cut of 2010, the return of healthcare contributions to pensioners and the payment of healthcare bills in due time. The IMF official is confident that the Romanian government will be able to comply with the commitments made but has warned that if the authorities failed to fulfil them by the end of June, a new agreement with the IMF will not be signed.