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Ionut Popescu: State not to pay private companies' debt with IMF money

The state will never pay any debt of the private companies with money taken out form the International Monetary Fund. This loan will be a safety net aimed at giving guarantees that there will be euros available on the market and that the exchange rate will not depreciate, said Ionut Popescu, economic advisor of PM Emil Boc.

'The state will not pay the private companies' debts, but if the debt is a foreign one, then the company or bank has to buy euro from the market. If there are no euros on the market the exchange rate depreciates and that affects us all, individuals, companies and so on. That's why we need this safety net that should give us the certainty that those amounts, in case companies need to buy euros, are available on the market and the exchange rate does not depreciate. Under no circumstance the state would borrow money to pay the private companies' debts,' Popescu explained in a TV show.

He stated Romania couldn't afford a salary rise of 25 percent with or without an IMF loan.

'An austerity program is needed throughout the world; it has to do what private companies are doing because they contribute to the state budget. The sate budget has a rational policy if it behaves like the private sector. When the private sector shrinks, the public sector must do the same, decrease its expenditure and make it efficient,' Popescu stated.

As regards a loan from the IMF, Popescu said that the beginning of negotiations with the Fund is marked by a letter of intent.

The finance Ministry and the National Bank of Romania have initiated preliminary talks with the representatives of the European Commission, the IMF and the International Financial Institutions as regards the evaluation of the economic framework and of Romania's foreign financing potential, reads a MFP release.

Following preliminary talks, Romanian authorities plan foreign financial assistance on the medium run, with the European Commission being notified in this respect.

An IMF mission headed by Jeffrey Franks will pay visit to Bucharest over March 11-25, as a continuation of the dialogue with the Romanian authorities. The IMF mission will further assess the macroeconomic situation and hold talks regarding a possible IMF program for Romania. The program will be part of a multilateral financial pro-active and safety package, to be backed by the EU and World Bank among other international financial institutions.

President Traian Basescu Monday evening, at the public TV station, said Romania is not considering stand-by type of agreements with the IMF, but only the Fund's final assistance.

 

Sursa: http://www.rompress.ro

Tags: money popescu companies private state mfp euro

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