In the course of 2003, the Romanian authorities gradually recognised that stepping up reform efforts is imperative for keeping EU accession on track, but the inclination to translate this agenda into ambitious front-loaded action plans has remained weak, the International Monetary Fund's report assessing Romania's experience with Fund-supported programmes since 1991 shows.
The Executive Board of the International Monetary Fund two weeks ago endorsed an ex-post assessment of the results of Fund-supported programmes in Romania in the last 14 years. The document identifies causes for shortcomings, lessons and safety precautions that need to continue being taken while working with Romania.
The authorities' commitment in the areas of wage policy and structural reforms remained weak, largely reflecting resistance from vested interests, the IMF report shows.
The collusion between management of large state-owned enterprises (SOE), labour unions and factions within ruling parties has frequently hampered efforts to impose financial discipline on SOEs and accelerate privatisation for years.
"In this context, concerns about the social impact of restructuring have been used by vested interest to defend keeping unviable SOEs afloat, while efforts to render the social safety net compatible with accelerated structural reforms have started only recently," the authors of the report say.
The Fund also points to the absence of a clear intra-governmental consensus on key economic policy parameters, which has weakened the line-ministries' resolve to ensure timely and full implementation of agreed measures. The authors of the report also note that, while the Prime Minister often intervened in such inter-ministerial differences to keep the programme on track, "valuable time was lost and programme reviews had to be postponed repeatedly."
As far as a new arrangement with the IMF goes, while IMF Directors agreed that the progress achieved under past programmes could in principle make a surveillance-based relationship feasible now, they nevertheless supported the view that a strong precautionary Stand-By Agreement (SBA) with low access would help strengthen the momentum for structural reforms in the run-up to elections later in the year, support the authorities in paving the way for EU accession, and facilitate a credible exit from the Fund's programme support.
Finance minister Mihai Tanasescu says the IMF's Executive Board is to debate the project of a new arrangement with Romania in June. However, that depends on certain conditions being met, although Tanasescu did not say which they were. The Finance minister says he has completed talks on the letter of intent for the new programme. The main difference, this year's budget deficit level was worked out by setting a 2.1% of GDP target to be legally adopted by a budgetary adjustment in late July.
razvan.voican@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
