International Monetary Fund pathetically bows to FNI

The International Monetary Fund decided to postpone the Board discussion on the extension of the stand-by accord concluded with Romania until it receives information about what is going on in Bucharest. The situation is to be analysed by the two sides during the following period.

“We have to discuss what is happening, to analyse the explanations and what measures should be taken. There may be measures that have to be included in the economic programme,” an official source told Ziarul Financiar.

Ion Dragulin, Romania’s representative with the IMF, told Ziarul Financiar that the Fund’s representatives maintain tight contacts with Romanian authorities in order to monitor events and to hold mutual consultations on measures that have to be enforced so as to go back to normality.

Thus, concerns voiced yesterday by Premier Mugur Isarescu during a TV statement tend to become reality. As one explanation for this crisis, Isarescu pondered whether “all this confusion is not linked to the fact that today the IMF Management Board is to grant green light to the stand-by accord with Romania, an accord which in its turn will unlock financing from the World Bank, the European Union and other official or private capital market sources, which will consolidate the recovery of the Romanian economy.”

Romanian Prime Minister Mugur Isarescu has taken it upon himself to preserve the country’s financial stability and to ensure a stable situation at BCR (Romanian Commercial Bank). He also pledged to clarify FNI situation and to identify and punish those who are to blame for the financial crisis. “There is a truth that I fully support: Romania’s financial situation is much more stable now that it was last year, and international financial institutions have acknowledged this evolution…I assume all responsibility to assure you that BCR’s financial situation is undoubtedly sound… Money deposited by the population and by economic units at BCR is completely safe,” Isarescu maintained yesterday.

The Premier decided to take this responsibility in an attempt to stop the FNI crisis from spreading in the banking system. So far, BCR has been the most affected bank, as misinformation and panic made depositors operate massive withdrawals. The system is currently coping with generalised confusion, as the latest scandals have weakened people’s trust in banks.

The events taking place in the system had immediate effects on the foreign exchange rate, which reflected mistrust in the system by an increasing demand of foreign currencies. Isarescu stated that both the foreign exchange rate and interest rates in the banking field will remain stable, “as a permanent proof that this speculative, coordinated attack against the Romanian banking system lacks ground.” Authorities started taking measures in order to analyse FNI situation and to avoid the occurrence of a system risk.

Isarescu maintained that he would personally get involved in heading the governmental commission for FNI investigation, aimed at identifying placements that have been made and recouping the money that has to be returned to its rightful owners – the investors. He pledged to make public the results of the governmental investigation, which has to point out clearly which was the responsibility of FNI managers, but also of CEC former management and CNVM, in having caused this financial crisis.