Gov’t approves Ordinance ratifying arrangement with IMF

Romanian Government on Tuesday approved the Emergency Ordinance ratifying the Stand-By Arrangement with the International Monetary Fund (IMF), with he conditions having been stipulated in the letter of intent signed of April 2009 and completed after the assessment and the supplementary letter of intent of September 8, Romanian Minister of Public Finance Gheorghe Pogea announced at the Victoria Palace.

He also specified that the Government approved the technical conditions stipulated for the second and the third tranche of the loan concluded between Romanian and the IMF, while referring especially to the costs and grace periods, and also that half of these two following tranches (some 1.788 billion euros respectively), will enters the State Treasury, with the beneficiary being the Public Ministry of Finance (MFP).

The money will be used to finance the budget deficit, to re-balance the current account of the Treasury, so that the state to be able to borrow less from the internal market and obtain resources from the IMF instead, on a longer term, with more advantageous interests compared to those on the domestic market, Pogea explained.

He also added that Romania will benefit of 9.87 billion euros DST (Special Drawing Rights) and 1.563 billion DST respectively from the IMF, via the two bodies – the BNR and the MFP.

The MFP will benefit of a total of 1.788 billion euros from the IMF, out of which some 920 million euros (half of the second tranche) will be transferred to the State Treasury in 48 hours, in an account opened in hard currency at the BNR.
The loan carries a 3-year grace period and a 5-year maturity.

‘The Government reaffirms thus its commitment to continue and accelerate the structural reform of the state and I will only refer to that regarding the consolidation of the fiscal policies. Thus, we are going to bring significant amendments to the budget process, by adopting a new law on fiscal responsibility.

Related to this, I would like to underline that, on a medium term, we are going to introduce improved procedures in terms of drawing up of the multi-annual budgets, with ceiling to be set for the budget rectifications during the year and also fiscal rules for the expenditures, public debts and primary deficit,’ the Minister of Finance said, also adding a fiscal council could be set to ensure the independent analysis and a better management framework for the expenditures during the entire year.

According to Pogea, the Government reaffirmed thus the maintaining of the targets related to the level of the debts, even if they were exceeded in end-July. ‘They increased as a result of the re-sizing of the debt stock, which was accepted by the IMF Board.

We will continue to act very careful and to monitor from a financial viewpoint the state-owned companies, so that they will be forced to continue with the improvement of their performances and with bringing an increase contribution to the net revenues of the state budget,’ the MFP official also said.
The Finance Minister also mentioned that a special attention would be further paid to the decentralization process, in the sense of its acceleration.

‘During these days, the same as during the latest weeks, the Ministry of Finance together with the other ministries have been working on the cost standards and on the normative acts over the personnel in the public system, which we need to complete as soon as possible, even if a slight delay appeared because of the complexity of such normative acts. nevertheless, I believe we will be able to complete the reform in a successful manner and to cut the expenditures with the functioning of the state.

The Government will continue with the reforms, even on the background of the economic crisis, for they are strictly necessary in a country in its way to modernization and sustainable development,’ Minister Gheorghe Pogea also said.

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