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Isarescu: External funding is needed ‘for prevention reasons’

Basescu said that on Tuesday or on Wednesday the assessment completes which will enable conclusions to be drawn on the amounts to be borrowed by Romania.

Contracting an external funding "for prevention reasons" to secure the economic stability of the country and to protect the economic interests of the people is necessary, as recently told to the government by Mugur Isarescu, Governor of National Bank of Romania, in the first reunion of the inter-Ministerial committee set up for securing Romania's internal and external funding, the Executive informs, cited by Mediafax.

"The talks approached the issue of the loan, as well, by correlating the fiscal policies of the Government with the monetary policies pursued by the National Bank," based on a press release.

The talks addressing a loan contracted from the European Commission and from the International Monetary Fund need to include references to the need for funding, loan terms and costs, as well as the corresponding measure program, Mugur Isarescu added. "I think we have three sub-topics for the topic we approach: the first is on the need for this foreign funding, the second is about its structure, meaning what does it consist of - terms, costs, possible economic impact - and the last one refers to the program of measures and to opportunities. As one has already said, pains, but also advantages, the chances we have," Isarescu said at the beginning of the talks. President Traian Basescu said that this week, on Tuesday or on Wednesday, the assessment completes on the basis of which one draws the conclusions on the amount to be borrowed by Romania and also in relation to the fact whether Romania considers one year or two years.

Traian Basescu does not wish to mention an amount. The head of state said that he has found out that attempts are made towards accrediting the idea that Romania would have to repay the whole amount in one year, and he said that this was a false idea. Basescu added that it was important to have, should Romania commits to this loan, an upgrading process of the state, even during this crisis time.

Last Thursday, Traian Basescu said that he was thinking that a grace time period of five-seven years should be negotiated for the external loan, so that Romania starts to repay the loan at a peak moment of absorbing EU funds. He mentioned that 2014 would be appropriate in this respect. Regarding the repayment deadline, both IMF experts and Romania's ones agreed that payments coincide with the time when the highest inflows of European funds are estimated for Romania, which is 2013.

Stolojan: the loan - not lower than EUR 10 bln

PD-L first vice-president, Theodor Stolojan, said, last Friday, that the foreign loan which Romania was negotiating with IMF and with the European Commission would be signed fast, until end of this month, and it would amount to EUR 10 bln, depending on negotiations, Mediafax reports.

He explained that one starts negotiations with IMF and with EU, "everyone watches you" and a delay would "result in lack of credibility" for the Executive. In his opinion, the government needs to adopt new adjustment measures, by reducing expenditures, and he indicated that these developments are similar throughout Europe, so that the word "recession" was used by business analysts, and this was replaced by "deep recession."

Sarbu: preliminary talks, nothing is yet conditional

Labour Minister Marian Sarbu said on Friday, after the end of the meeting with IMF representatives, that these were preliminary talks and "nothing was yet conditional", Mediafax informs.

Also, after the talks from Labour Ministry, an IMF representative said "the talks are on the right track" and no terms were discussed.

"Regarding the policy on salaries, the IMF representatives were interested in the reform propositions for the next two years, as well as in options to simplify the salary system both for the public system and for the private one," based on the press release issued on Friday by Ministry of Labour, Family and Social Protection (MMFPS).

On Thursday evening, Labour Minister, Marian Sarbu, said at Realitatea TV, that the representatives of the Executive would oppose a possible proposition of IMF to freeze pensions, specifying that the talks with the representatives of the Fund would not take place from divergent positions, according to Mediafax.

The former Finance Minister, Varujan Vosganian, said last Saturday in Iasi that Romania would need the loan from IMF and from the European Commission to fund the public deficit, and there should be EUR 19-21 bln to be requested from the international bodies. The PNL Senator explained that one of the risks that Romania would have to handle in 2009 was related to the funding capacity of the budgetary deficit, as well as the funding capacity of the current account.

On the other side, the Minister for SMEs, Commerce and Business Environment Constantin Nita said on Friday, in Bistrita, that PSD did not oppose funding for Romania to be accessed from International Monetary Fund (IMF) but this has to take place under such terms as not to affect the Romanians' standard of standard, Agerpres informs.

Mitrea: Geoana and Hrebenciuc did not want Mihai Tanasescu for finances

PSD Senator Miron Mitrea says that Mircea Geoana and Viorel Hrebenciuc did not want Mihai Tanasescu to have the portfolio of Finance Minister and this would affect the party, according to the newspaper ‘Gandul.'

Mitrea accounted recently, for the paper, that after PSD had decided to form the government with PD-L, talks took place that Social-Democrats would ask Finance Ministry (MF) if they do not provide the PM. The options were Florin Georgescu and Mihai Tanasescu, the first opting for keeping his office as vice governor of National Bank.

"I called Mihai, I talked to him; he said that certainly, if the offer comes from the party leader, then he agrees. I talked to Mircea Geoana, and he said that he would contact him, in a first stage. I found out, after a week, talking to Mihai, that he had not been contacted by anyone," Mitrea said. He says that he cannot tell who "opposed strongly" eventually, Mircea Geoana or Viorel Hrebenciuc.

The PSD Senator says that he has nothing against the current Finance Minister Gheorghe Pogea, but there is a gap of "knowledge volume" between him and Tanasescu.

Traian Basescu commended Mihai Tanasescu, the president saying, on Wednesday evening, on Antena 3, that this was a "responsible Finance Minister," which left behind a low budgetary deficit, in spite of the fact that 2004 was an electoral year.

Negative feedback in relation to the loan

Romania does not need a loan from IMF provided that the Government has an anti-crisis plan, according to those said yesterday in a press conference by the leader of National Liberal Party (PNL), Calin Popescu Tariceanu.

According to the former PM, a loan from IMF will result in charges and duties being raised, as well as in "dramatic budgetary raises". Tariceanu added that he warned President Traian Basescu a long time ago in relation to the "unfortunate" effects of such an agreement.

The agreements with IMF are regarded as weakness and Romania should not look for money with IMF, but with the business people from Romania, according to those declared by the businessman Dinu Patriciu, at Realitatea TV, in the broadcast "3x3". He said that "solutions for crisis could be found in Romania, and the private funding, external and internal, could bring more money that an IMF loan could do. The bad image is something that it was made by ourselves, and if we know how to adjust this, than the money comes quickly and in a simple manner."

Within this broadcast, Romania's representative in the European Commission, Leonard Orban, said that "it would have been better not to be in such a situation, to not need to take loans and at times of economic growth, one needs to secure the future, to prevent things from happening. Nevertheless, it is very difficult to prevent such a crisis from happening, but one has to pursue a prudent policy," repeating that Brussels had conveyed Bucharest several warnings.

 

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