IMF expects Romania to implement the key elements of the arrangement

The International Monetary Fund waits for Romanian Government to decide on whether they would like to modify the policies meant to secure the agreed deficit target, Gerry Rice, Director of the Communication Department of IMF, said during a press briefing at Washington, yesterday.

Asked how does the IMF review recent developments in Romania regarding the contract with the IMF, Rice said that the IMF mission visited Romania for establishing the conditions under which the stand-by agreement will stay and that ‘they came to an agreement with the Romanian authorities on the policies needed to conclude the first review and the Romanians stand by the arrangement with the fund, including policies on the fiscal deficit. Now, we’re aware of disagreement within the government over the specific measures to be used to reach this fiscal target. We are monitoring those developments closely of course, and awaiting a decision by the authorities on whether they would wish to modify the policies needed to secure the agreed deficit target, again before the policy package would then be submitted to our executive board for approval.’

Without discussing about a possible date for the return of the mission, Rice reinforced the Fund’s position stating that ‘We trust that the authorities remain committed to fully implement the key elements of the agreements so that the first review of the SBA can be completed.’

Romania has a 2 billion euro stand-by agreement with the IMF and the EU Commission, whose memorandum was supposed to be discussed within the IMF Board Meeting this December.As one of the economic measures meant to reach the fiscal target, the Government undertook, concerns the 7 eurocents new tax on fuel, Romania’s President, Traian Basescu, announced on December 2 that he will not sign the IMF Memorandum, causing a new dispute with the Government.

Under these circumstances the validity of arrangement is questioned, yet the IMF has avoided any discussion on the subject until now. As Basescu categorically rejected any possibility of re-considering his position, the Government tries to find a solution so as to get Basescu’s signing and meet the IMF’s requirements.

One possibility conveyed this week is to apply the excise duty only on gasoline and to postpone the taxation of diesel fuel for three months. Prime Minister Victor Ponta said early this week that Romania’s Minister Delegate for Budget, Liviu Voinea will discuss this possibility with representatives of the European Commission who said that are ready to consider any solution as long as it has the same impact as the one initially established.