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Mihai Tanasescu: Precautionary agreement discussions with IMF to be held in upcoming days

The authorities in Bucharest will have preliminary discussions in the next few days with the International Monetary Fund (IMF) representatives for a new precautionary agreement, Romania's representative to the IMF Mihai Tanasescu, ex-Finance Minister, told a public television channel on Monday.

In a previous statement made to Agerpres on the same topic, Mihai Tanasescu had explained that a new agreement with the IMF did not necessarily involve a new financial resources loan, but the continuation of some reforms in partnership with the IMF and the European Commission (EC), so that Romania might regain the investors' trust and might borrow the necessary amounts at lower and lower interests from the domestic and foreign financial market.

'For example, we very well know that a number of state companies, which are monitored, have now begun to register some progress, although still slight. The restructuring process in these companies must go on and must be accelerated and, together with the IMF and the EC, we can establish the best ways for these companies to become more efficient, so that the tension on the public finance might be eased off and the infrastructure and social expenses might get more funds,' said the former Finance Minister.

Another field in which Romania may have a partnership with the IMF and the EC is that of finding the methods to make the labour market more attractive, more flexible, so that the number of employees should increase.

'These are only two examples of partnership, of collaboration between Romania, on the one hand, and the IMF and the EC, on the other hand. This partnership does not involve resources, but only gives a higher credibility to the reform process, which will enable Romania to borrow money naturally from the financial markets at lower and lower interests. This is the policy of a future collaboration both with the EC, as well as the IMF. The resources the state must draw for financing the budget deficit will be constantly decreasing, but it is important that the price of these resources decreases as well. This can only be done by re-establishing the trust of Romanian and foreign investors and credibility comes from reforming certain fields important to the consolidation of the public finances,' Mihai Tanasescu underlined.

Cutting flat tax rate untimely now

'I do not believe that reducing the flat tax would be timely now,' Romania's representative to the IMF and former Finance Minister Mihai Tanasescu declared in a broadcast of the TVR public television channel. 'Social security contributions are high in Romania, and cutting them would be a highly positive signal, but this must be done in a sustainable way, gradually, so as to keep the pension fund, the healthcare and the unemployment insurance funds unaffected. Social contributions need to be reduced in such manner as to not widen the fiscal deficit,' Romania's representative to the IMF declared on Monday. In Tanasescu's opinion, the advisable method to reduce social security contributions is by performing structural reform on having the pension and uniform wage systems.

'The IMF has taken note of these ideas tabled by the Liberal Democratic Party (PDL), we will thoroughly analyze them in the next period and we will carry out a qualitative, efficiency-related, and a quantitative analysis, to see to what extent and when this move should happen. I believe that the most important thing for Romania now is to send a message of stability. I do not think that cutting the flat tax rate from 16 to 12 pct would be timely at this moment. The IMF mission will discuss this aspect too,' said Mihai Tanasescu.

The IMF mission due to come in Bucharest will analyze the targets Romania had to meet. 'The fiscal deficit and current expenditure targets, as well as the revenue levels have been attained.' Apart from this, there are also the structural reform targets, in particular the pension law and the law on the uniform wage system. 'I hope that Parliament on Tuesday discusses this law so that it is approved and comes in force as soon as possible,' said Romania's representative to the IMF, who reminded that the Romanian government had pledged the approval of the law by the end of October.

Mihai Tanasescu also expressed hope that the two Chambers discuss the pension law and pave its way towards a fast enactment. The official also reiterated his conviction that at this moment Romania no longer needs IMF money, but the credibility of a new partnership agreement with the Fund. 'Preliminary talks' will take place in Bucharest in the coming days for a new precautionary agreement with the IMF.

Romania has received so far 11.27 billion euros out of a total of 13.15 billion euros loan agreement with the IMF, plus 3.5 billion euros of the 5 billion euros worth of loan arrangement with the EC and 300 million euros from the World Bank. The total financial support package Romania and the world lenders agreed upon on May 4, 2009 is worth a total of 20 billion euros.

Sursa: http://www.actmedia.eu

Tags: romania billion euros mihai partnership precautionary agreement tanasescu tvr

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