Money and loans

The money goes to the National Bank to strengthen the hard currency reserve and maintain the current level of the exchange rate. Last week, Bucharest received from the European Commission some 1.15 billion Euros to cover part of the budget deficit.

Romania signed a 20 billion Euro foreign aid package with the IMF, the EU and other international financial institutions.

So far, Romania received 10.7 billion Euros from the IMF, 3.65 billion Euros from the Commission and 300 million Euros from the World Bank. IMF experts and representatives of the European Commission said at the end of their assessment mission in August, that Romania complied with the commitments it had made, among which reducing state arrears.

The IMF board also decided that a new mission of the fund will come to Bucharest in October to make a new assessment of the current agreement. It is also in October that preliminary talks will be started to sign a new agreement with the Romanian authorities, to be finalized in early 2011.

Last week, president Traian Basescu told Parliament that in 2011 Romania needs to sign a new agreement with the IMF, because structural deficits make it difficult for Bucharest to contract long-term loans.

The Romanian president also said a new loan could no longer cover consumption, but investments in development, which is the only way to create jobs and create healthy economic growth. The IMF warned that Romania should go ahead with the reform of the state sector payment scheme, reduce arrears and restructure state-owned companies.

In early September, the Romanian government approved an additional letter of intent to the loan agreement with the IMF.

Under this document, the government committed itself to revise the social assistance system, the Labour Code and other laws regulating the labour market. Along the same lines, 74 thousand jobs in the state sector will be slashed by the end of the year.

Other measures include increasing fees for transport services and public utilities, introducing new taxes on big incomes and eliminating tax exemptions. A budget deficit of 6.8% of the GDP is one of Romania’s main targets, according to the agreements made with the IMF and the European Commission.

(Radio România Internaţional, Serviciul în limba engleză).