IMF praises Government, pushes for salary cuts in energy sector

The Nastase-led Government must put a lid on the energy sector wages, especially in the case of the National Oil Company Petrom, if it wants to get the fourth installment of the stand-by loan granted by the International Monetary Fund one year ago.
Unless these measures are applied, inflation, which has turned into the IMF’s favourite target, could spin out of control next year, ruining the entire programme.
The wages paid in the energy sector, which is subordinated to the Industry Ministry, have already exceeded the targets set with the IMF. As a result, the Government will even have to operate salary cuts. As for bonuses, a rather frequent occurrence in companies such as Petrom and Termoelectrica, they are completely out of the question this year.
Despite some very generous statements regarding the Government’s economic performances, the International Monetary Fund still needs to be persuaded that everything will be alright, so it expects a new set of preconditions to be met within very precise deadlines, which were negotiated until the wee hours of the morning.
The IMF is also considering the risk that the salary problem in companies such as Petrom, Termoelectrica and Electrica could interfere with the declining trend of inflation (which was in fact very much praised), mainly under the pressure of the minimal wage raise, up to 2,500,000 ROL.
Consequently, the list of preconditions is led by a wage cut for the energy sector, where salaries could not be kept under control this year. In the case of Petrom, the initial target for September was so much exceeded that even the annual cap is now ruled out. All this, despite the personnel downsize by the externalisation operated at the beginning of summer, which in fact had no effect whatsoever upon Petrom’s salary-related expenses. Termoelectrica and Electrica also granted big wages.  The IMF has accepted a cut in the annual target for wage raises in the quoted companies, but wants to see at least this one enforced, as it has learned from experience that the cancellation of bonuses by the end of the year and even salary cuts will be met with fierce opposition.
The Fund experts argue that the faster inflation drop was greatly helped by the extremely favourable international conditions, which allowed for the “preservation” of the ROL/USD exchange rate for about six months. Moreover, they are considering the experience of other countries that managed to push inflation down to 12%, only to see this process clogged up afterwards, because of unresolved structural problems.