Talks with IMF as of October 20

The negotiations for a new precautionary arrangement-type stand-by agreement with the International Monetary Fund (IMF) will begin on October 20, when a delegation of the financial institution is due to arrive in Bucharest, Finance minister Mihai Tanasescu said.
PM Adrian Nastase sent IMF’s Managing Director Horst Koehler a letter inviting the financial institution to discuss the conclusion of a new agreement with Romania.
This type of commitment sets the Government’s macroeconomic policy guidelines, but the drawing of money is not provided for unless there is an emergency. The failure to meet the deadlines for various commitments is no longer punished by freezing loan tranches, but by mere reports of the Fund, which have a lower influence on foreign investors and capital markets.
After fourteen years, Romania is very close to seeing a stand-by agreement with IMF through, but the talks in the Board during the last review scheduled for next month will be extremely tough.
The Romanian authorities at the end of July signed a supplementary economic policy memorandum with the IMF representatives. Meeting the requirements in the new memorandum would result in the completion of the first agreement with the IMF after 1989.
The most sensitive issue the Government is facing at the moment is that of the large companies, which have to be either privatised or liquidated.
Whereas negotiations for a takeover of Tractorul Brasov by Italy-based Landini are almost over and an offer has been made for Aro C=mpulung, the Privatisation Authority has not found a solution for Roman Brasov yet.
“If no investor interested to buy it is found until the end of the month, Roman Brasov could be liquidated. After all, the Privatisation Authority will continue to operate until the end of the year and any company left unprivatised will go into liquidation,” the quoted sources said. .
The memorandum is to reach the IMF’s Board in view of approval on October 8. A favourable decision of IMF’s Board could get Romania, besides the first agreement completed, the last two tranches of the loan worth about $153 million.