IMF: New redundancies, payment of arrears, and reforms for the next tranches to be released

Making 74,000 redundancies in the public sector until the end of the year and a further 15,000 in 2011, the immediate payment of 1.9 billion RON in debts to the pharmaceutical sector, and dropping salary cuts for BNR (National Bank of Romania), CSA (Insurance Supervisory Commission), CNVM (National Securities Commission), and CSSPP (Private Pensions Supervisory Commission) are the main new commitments taken by the Government to the IMF.

The Government also promises an emergency ordinance on taxation of big individual fortunes, eliminating the 13th salary, as well as freezing pensions in 2011.

In a conference in which he commended the Romanian authorities for implementing ambitious fiscal consolidation measures, Jeffrey Franks, chief of the mission in charge of reviewing the arrangement with Romania, said he did not recommend modifying the tax system next year or cutting the current taxes.

The IMF board is set to release the next 914 million-euro tranche at the end of September, after the authorities have met the set preconditions, among which the payment of 1.9 billion RON in state arrears.

Franks said reform of the pensions sector and implementation of unitary pay legislation, which needs to be adopted by Parliament in September, are “critical”.