The International Monetary Fund (IMF) will not conclude a new agreement with Romania unless a set of concrete reform steps is taken before the Board of the institution discusses the project.
This conditioning is actually something the Fund has learnt from its past failures in the relationship with Bucharest: no strict conditions, no reforms taken.
The Fund mission that has been in Bucharest in the last few weeks presented the authorities the evaluation report draft on the efficiency or the economic programmes negotiated over the last 14 years, which is to be debated by IMF's Managing Board on March 22. The report shows 1997 was the only year when Romania really conducted structural reforms. After all, IMF's experts found one of the reasons for the low efficiency of the Fund's programmes for Romania was precisely the failure to concentrate the measures set by those programmes on reforming the structure of the economy. Compared with the other countries in the region, Bulgaria included, IMF saw the weakest performance in Romania, which made certain members of the Board wonder what is the point in negotiating further programmes.
The European Union, however, wants the IMF to continue monitoring Romania economically, as its bureaucrats would need too much time to take this over and delve into the specific economic problems Romania is having.
At the same time, IMF has no intention of handing Nastase Cabinet a blank economic policy credibility cheque, for which reason it will postpone endorsing a new agreement for as long as it takes to have its pre-conditions met.
It remains to be seen whether the Cabinet will be ready to conclude an agreement in May, for instance, which would pit it against a first evaluation mission right before the elections. Nastase Cabinet is now supporting a longer-term agreement with the IMF, which should cover the 2005-2006 period until accession, instead of only a year as initially announced. The extended agreement should work as an anchor to compensate for the weakness of the authorities in continuing reform.
In view of a new agreement, IMF stresses on an even lower budget deficit, which the Finance Ministry brought down to 2.3% of GDP in 2003.
On the other hand, Neven Mates, who has been IMF's Negotiator for Romania for four years, concludes his last visit to Bucharest in this position today, as the negotiations are to be resumed in April with a new mission leader. razvan.voican@zf.ro
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