Business | Economy

Romania completes IMF, EU talks

Country pledged to continue €5 billion loan agreement with the IMF and the EU

  • Bloomberg
  • Published: 15:49 August 12, 2012
  • Gulf News

Bucharest: Romania, the International Monetary Fund and the European Union “successfully” completed talks on the sixth quarterly review of the terms of a precautionary loan, Finance Minister Florin Georgescu said.

The government secured the amounts it needs to restore public wages to the level before a 25 per cent cut in 2010, Georgescu told reporters in Bucharest late yesterday. It also pledged to sell a majority stake in chemical company Oltchim SA to a strategic investor by mid-September and hold a public sale of a 15 per cent stake in natural-gas grid operator Transgaz SA.

“We’ve also agreed on some measures to stimulate the business environment and the creation of jobs,” Georgescu said. The economy will grow about 1.2 per cent this year, while inflation will be 3.5 per cent and the budget deficit 2.2 per cent of gross domestic product at the end of 2012, he said.

The government of Prime Minister Victor Ponta, Romania’s third cabinet this year, pledged to continue a €5 billion (Dh22 billion) precautionary loan agreement with the IMF and the EU. It secured an additional €1 billion from the World Bank this year, though it hasn’t yet drawn any money. The lenders are scheduled to publish their findings on the government’s progress on fiscal targets and planned asset sales in the coming days.

Georgescu also said the details of the 2013 budget will be discussed with the lenders at the next review mission at the end of November or beginning of December.

Political Turmoil

Romania, scheduled to hold parliamentary elections around that time, is going through political turmoil amid a power struggle between Ponta and suspended President Traian Basescu that’s undermined investor confidence and weakened the leu.

The bickering deepened after the Constitutional Court delayed ruling on whether a July 29 referendum to impeach Basescu was valid, citing conflicting data on the voting lists. The ministers in charge of updating voting lists resigned on August 6 and were replaced the same day. The government must send updated voting lists to the court later this month.

The feud in Bucharest prompted international leaders, including the European Commission President Jose Barroso, to voice concerns about the developments in the eastern European country and urged the government to respond to requests from the Constitutional Court.

The US will send US Assistant Secretary of State Philip Gordon to Bucharest to discuss the concerns of the authorities in Washington about the impeachment procedure, Mediafax reported yesterday, citing a statement by the US State Department.

Gulf News
Quick Access

  1. Markets

  2. Economy

  3. Property

  4. Aviation

Business Top Stories

  1. How Apple employees can see your texts, photos

  2. Always remember to check out the perks

  3. Is gold approaching a tipping point?

  4. How about some help for Generation Rent?

  5. The risky business of pension de-risking