Tonny Lybek: Romania’s economic vulnerabilities deepened the crisis
One of the many economic vulnerabilities of Romania was represented by the foreign debt, which although not too big in itself, it was quite big considered on a short term, Tonny Lybek said.
Another vulnerability was represented by the large fiscal imbalances, in the very same interval when the Romanian economy seemed to flourish. A deficit of minus 4.9 percent attracted also foreign credibility problems which Romania had been facing before concluding the arrangement with the IMF, the World Bank, the European Commission and the European Bank for Reconstruction and Development.
Tonny Lybek reminded that the IMF accepted a deficit of minus 7.3 in August 2009, also it had provisioned one of 4.6 percent in March 2009 and one of minus 5.9 for 2010, to go down to minus 4.3 in 2011.
‘The state companies faced huge problems with the arrears and had to be monitored more carefully, while the government was forced to behave as a shareholder’.
Referring to the necessity Romania to have a credible budget in order to obtain the third tranche from the IMF, the IMF representative in Romania and Bulgaria underlined also there were too many budget rectifications operated by the government and that the allotments of funds from the budget suffered from constant political pressure.
Tonny Lybek also requested the inflation target to be maintained, while specifying that the foreign banks accepted to maintain their exposure level on the Romanian market and underlined that when a budget expenditure appears, the authorities need to establish very clearly the resources existing for it. Lybek also underlined that wanting to make investments in infrastructure was not enough, for the capital to finish the works is also more than necessary. ‘It often happens a series of capital expenditures to become current expenditures’ the IMF representatives also said.