The current political environment and the lack of a government to submit the 2010 budget to the Parliament has held back the completion of the program review of the International Monetary Fund and European Commission. International institutions have thus decided to put off the disbursement of the following tranches under the aid deal with Romania.
Romania, “on a diet”
The third tranche totaling €1.5 billion under the €12.95 billion package from the International Monetary Fund, originally slated for December, has been put off for next year due to a domestic political crisis that blocks the approval of 2010 budget.
The only chance Romanian authorities have to receive this tranche is to pass the 2010 budget. And there is one condition for that: a government with parliamentary legitimacy.
“According to our program, the board of IMF is due to meet on December 15 to discuss Romania’s problems, so all the country’s commitments must be fulfilled five days beforehand. We must assure of an adequate fiscal situation in 2010 and for that we need a budget draft at least”, said Jeffrey Franks (photo), IMF mission chief.
IMF could not complete the review of the country’s economic performance, and a follow-up mission will return to Bucharest to successfully complete the review once the political situation is resolved”.
The IMF mission chief in Romania added the country must go on a diet, because fiscal policy imbalances cannot be corrected forever by “tightening the belt”.
“Romania cannot tighten belt forever. Of course, you can tighten the belt, but at a certain point it will break. Another way would be to go on a diet. On a long term, the public sector will have to be put on a diet”, said Jeffrey Franks, adding that fiscal measures had been validated too late to contain the budget gap within the target range for 2009.
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