IMF approves stand-by agreement with Romania, worth 12.95 billion euros

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The Executive Board of the International Monetary Fund (IMF) approved, unanimously, the stand-by agreement with Romania, for a period of two years, worth 12.95 billion euros, said Romania’s representative to the IMF Mihai Tanasescu.

‘The agreement was approved with unanimity of vote by the IMF representatives, considering it is beneficial for Romania and the region. The IMF representatives considered that the loan agreement of Romania is useful and solves all the problems related to sustainability and offers stability in the region, ‘ Tanasescu also said.

He mentioned that although there some different opinions, the IMF representatives appreciated the pro-active activity of Romania to counter in due time the effects of the crisis, ‘before the glass is full.’

According to Finance minister Gheorghe Pogea, in the letter of intent, besides the structural performance indicators, Romania has a commitment of observance of some deficit targets, which means 24.3 billion lei absolute value of the deficit, corresponding to a figure of 4.6 percent of GDP and the quarterly observance of the targets set, of 14.5 billion after the first quarter and 18.6 billion lei at the end of the third quarter.

As regards the companies where the state holds most of the capital, or entire entirely held by the state, Pogea said that they will be submitted to monitoring with a view to the improvement of their performance, they have to be found in the cut in arrears among companies, in the cut in arrears in the economy and an increase in profitability.

One of the conditions agreed by the IMF as regards these companies is the raise in salaries in the state companies which will report profit, but it has to be done in close connection with the increase in labour profitability.

The Government committed itself, under the agreement with the IMF, to finalize in 2009 the law of the single salary system in the public sector and the law of the public pension system. The law of the single salary system is due to be finalized until the end of October, the law on fiscal responsibility, limiting the number of budget revisions until the end of November, and the law of the reform of the public pension system until the end of 2009.

According to state secretary in the Ministry of Public Finance Gheorghe Gherghina, the first revision of the agreement for the foreign loan of Romania from the IMF and the European Commission is scheduled for July 10.

The representatives of IMF and EC will come to Romania on July 10, in order to examine how the economy ‘is moving’, and if the conclusion is reached that the budget revenues are not achieved, an additional memorandum will be made to the loan agreement, stressed the official.

‘With the expenses we are as planned. If we do not succeed to make revenues, we will be asked either other measures for an increase in revenues, or measures for a cut in expenses,’ Tanasescu explained.

Romania has agreed with the IMF on an agreement on two years, for 12.95 billion euros, with the total package of foreign financing from the IMF, the European Union and World Bank and the European Bank for Reconstruction and Development reaching in the end 19.95 billion euros.

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