Ponta: the IMF defers the third review on the SBA with Romania until November

The International Monetary Fund Mission is leaving Bucharest without any evaluation report, said Victor Ponta in a Bloomberg interview. Also, a new visit of a Fund’s mission in the next period, namely in July-August, it is uncertain, according to Mediafax which cites sources close to talks.

Romania’s Prime Minister said that the IMF expects the 2015 budget draft before completing this review. Thus, the lender’s Board will meet for the review most likely this fall. Ponta also announced that the ongoing Stand-by Agreement remains effective, although the review is deferred, however, upon its expiration there is no need for a renewal and a further extension.

The main issue generating the postponement seems to be the fact that there has not been reached any conclusion as regards the  decrease of the CAS (social insurance contribution) by 5 percentage points which Romania seeks to implement in the second half of the year and which was one of the major topics on the agenda. 

Ioana-Maria Petrescu, the Minister of Finance had previously announced that this fiscal measure should come into effect as from July 1, being expected to act as an incentive to the business environment with positive effects on limiting undeclared work.

A joint Mission of the International Monetary Fund, the EU Commission and the World started last week a visit in Bucharest for the third review of the 2-year SBA concluded last fall and treated as precautionary. The review is an intermediary one and it was requested by the Romanian authorities and it coincides with the planned Article IV consultation and the mid-year budget rectification. 

In late March 2014, the IMF’s Board completed the first and second reviews of Romania’s economic evolution under the conditions agreed in the SBA, subsequent to the IMF Mission that came to Bucharest at the end of January 2014. With those assessment completed, the Fund made available for disbursement an additional amount of 436 million euro, thus the total resources Romania can access under the SBA come to some 654 million euro of nearly 2 billion euro - the total amount.