According to Romania’s representative at the IMF, the slowdown of reforms within state-owned companies will force the international financial institution to impose strict measures.

The growth in exports will slow down next year and the agricultural sector will probably no longer have the same impact on the GDP, so that economic growth will depend more on private consumption, Mihai Tanasescu stated yesterday during a PRO TV show. He relied primarily on a growth in corporate consumption, against the backdrop in which the figures are showing that next year companies will hike investments and will earmark more funds for expenditures. Asked whether Romania will register economic growth next year, Romania’s representative at the IMF stated: “We will certainly see economic growth in 2012,” adding that its level will be revealed on November 7, at the end of the current IMF mission that is evaluating the stand-by agreement. The most important points on the meeting’s agenda consisted of next year’s budget and the reform within state-owned companies, a Presidency communiqué informed.

Tanasescu pointed out that the economic growth will be smaller than the 3.5 – 4 per cent level forecast this summer. “Romania will continue to register economic growth in 2012 too, with different engines than in 2011.” The most recent estimates reveal an economic growth slightly above 2 per cent next year.

The TV anchors told the former Finance Minister that privatizing the state-owned companies’ management has been an issue discussed since the start of the year but nothing was done about it. Romania’s representative at the IMF admitted that the process is experiencing a “slowdown,” pointing out that “shorter” deadlines could be set. “There is a deadline, even shorter deadlines will be given. In case the current deadline is not met we will probably be less lenient,” Tanasescu stated.

Asked whether failure to fulfill these criteria could put Romania’s agreement with the IMF at risk, Tanasescu pointed out this is a precautionary agreement that does not necessarily entail the transfer of needed money. He underlined the fact that image is more important than money. Romania’s representative at the IMF continued: “In the programme we defined with the government, this privatization of state-owned companies’ management is very important because we know that political influence at these companies’ level is very strong.” Referring to the government’s capacity of reforming state-owned companies that register losses, Tanasescu expressed his hope that 2012, which is an elections year, “won’t come into conflict with the structural reforms programme,” pointing out that mixed signals are coming from the government. “There are good signals coming from the transportation domain where there are attempts to move things along, and then there are less than good signals from the Economy Ministry domain where we are seeing a slowdown in reforms,” Mihai Tanasescu revealed. He also pointed out that currently all Q3 indicators are met, this being for the first time when Romania fulfils the arrears indicators at state-owned companies’ level for Q3.

Asked whether the government has the needed resources in order to index pensions and hike salaries in 2012, Mihai Tanasescu avoided a clear answer, pointing out that what has to be had in mind are the resources that can be accumulated, expenditure priorities for 2012 and Romania’s possibility of having a financeable fiscal deficit. He pointed out that according to the analysis conducted until now, 2011 is a year in which the government’s goals will be reached, but things will “grow a little complicated” in 2012 because of significant turbulences at international level.

2012 budget built on RON 4.3/EUR exchange rate

Next year’s budget will rely on the stability of the fiscal system and of expenditures, the “balancing of public funds” set to play a very important role because squander would do nothing but destroy this country’s future, Mihai Tanasescu stated. Ro­mania’s representative at the IMF added that next year’s budget will be based on an average exchange rate of RON 4.3/EUR, RON 0.09 higher than the rate on which the 2011 budget was based and close to the current exchange rate. He pointed out that the national currency has remained stable throughout this period of international turbulences and has evolved in “more than reasonable” limits. At the same time, according to Tanasescu, the government will include in next year’s budget a list of approximately 60 important investment projects that he will watch on a weekly basis.

In other developments, the former Finance Minister underlined that there is the possibility that local bank branches will transfer money outside Romania if their parent banks demand it, pointing out that measures for maintaining exposures have been established in Brussels.

Franks: Inflation drop, best piece of news since latest visit

The head of the IMF mission to Romania, Jeffrey Franks, stated yesterday at Cotroceni that Romania should remain cautious in the present economic context. President Basescu replied this was the target of the Romanian side, adding that “figures” for the third quarter were encouraging, Mediafax reports. Franks added that the reduction of the inflation rate beyond estimates was the best piece of news since the IMF delegation’s latest visit to Romania.

Source: Nine O'Clock