The IMF hasn''t completely forsaken Romania

Jeroen Kremers, the executive director within the IMF board representing the group of countries Romania is part of, on Monday met premier Calin Popescu-Tariceanu and finance minister Sebastian Vladescu, in order to discuss how the relationship between the two sides stands, following the failure of talks in October.

The meetings were held at the request of the IMF official.

During the talks, the head of the government promised the IMF official that the Government would work to sustain the macroeconomic balance, together with the NBR.

As regards the biggest worry of the Fund”s experts, namely next year”s wage policy, Tariceanu maintained that the wages of public sector employees would evolve in such a way as to reflect economic growth, without creating imbalances in the economy.

“The wage policy will be a highly cautious one and will reflect output growth. We are seeing a very positive trend, of economic expansion, and of decreasing inflation. This tendency has to be backed up by macroeconomic policies that are very well focused upon the objectives we”ve set,” stated the premier.

As regards Jeroen Kremers” position, the Government press release only cites Kremers” previous confirmation that January will see an IMF delegation coming to Bucharest for the annual standard evaluation of Romania”s economic situation. This review is carried out in line with the stipulations of Article IV of the Fund”s operating documents, and is undertaken periodically for each member state, having nothing to do with the stand-by agreement frozen during this year.

“I will inform the director we have not managed to review our agreement with Romania, and the Fund”s board will be informed in November that the arrangement derailed. We are signalling that we disagree with the general state of the authorities” macroeconomic policies,” the IMF”s chief negotiator, Emmanuel van der Mensbrugghe, stated at the close of October”s round of talks.

In this context, Jeroen Kremers has come to Bucharest to personally discuss the stage at which the relationship between the IMF and Romania has come to. Formally, the agreement may be unilaterally denounced by the IMF and thus terminated, otherwise it remains in force until next summer.

“The Fund does not quit easily,” NBR governor Mugur Isarescu stated last week, in the context where he warned that the government”s wages and fiscal policy could cause serious problems in fighting inflation.

As a matter of fact, the central bank had received renewed warning signals from Washington as early as last week, when the Fund had also heard about discussions linked to the possible increase of the inflation target for 2006.