IMF comes to Bucharest for consultations on 2005 budget

A delegation of the International Monetary Fund (IMF) is due to arrive in Bucharest this week to discuss with the Romanian authorities about the 2005 budget draft, as well as about the healthcare and pension reform, said Finance Minister Mihai Tanasescu, after accompanying PM Adrian Nastase for a meeting with IMF’s Managing Director Rodrigo Rato.
“We need as much foreign direct investment as we can get, so that we could create jobs and last, but not least, jobs that pay better. Actually this is the message we conveyed to the management of the International Monetary Fund and it is, in my opinion, the starting point for all the talks that will be held with the team due to arrive in the coming weeks for the first time since the signing of this arrangement,” Tanasescu said.
The Prime Minster added the authorities wanted to continue reform, but at the same time provide for funding sources so that social problems could be better taken care of.
“During our talks with the Fund’s representatives we want to find together the best solutions to deal with these economic or social issues, without affecting the macroeconomic indices, the macroeconomic stability,” Nastase said.
The International Monetary Fund’s expert team due to arrive in Bucharest will also perform a first assessment of the stand-by arrangement the Fund’s Board approved early in the month, as the first half data on the macroeconomic indicators trends will become available.
The precautionary stand-by arrangement gives Romania the possibility to draw about $362 million from the IMF, which will be used for contingencies only.
“This agreement entails a safety base of approximately $350 million, which could be used only for contingencies. At the same time it is an agreement that provides credibility for the Romanian economy and for Romania, extending to the capability of securing external financing under certain circumstances, which is beneficial for private companies, as well,” Adrian Nastase added.
The main targets of the economic programme underlying the new agreement with the Fund are restraining the current account deficit, slowing down the lending growth and curbing inflation to a single-digit figure, based on the adjustment of the domestic demand.
The programme includes adjustments intended to boost efficiency in terms of fiscal spending and revenues. The social security contribution cuts will continue, and at the same time steps to broaden the taxation base and improve fiscal administration will be taken.
miruna.lebedencu@zf.ro