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Tanasescu: Debt rescheduling can generate more money for the budget and help companies rebound

Tanasescu: Debt rescheduling can generate more money for the budget and help companies rebound
08.06.2009, 18:40 12

The Finance Ministry may resort to rescheduling schemes over the a limited period of time, of one to two years, in order to take care of the debt to the budget of ailing companies, if those companies undertake restructuring programmes and debt repayment schedules, to ensure constant flow of revenue to the budget and support recovery plans of those companies, says Mihai Tanasescu, former finance minister.

"The rescheduling programmes that had their goals properly defined led to higher revenues to the budget and disciplined economic operators. I believe that they need to be limited to one or two years and be well monitored so that they could reach their two-pronged goal: financial recovery of the ailing companies based on a restructuring programme and the constant collection of revenues to the budget," Tanasescu told ZF in an interview.
More and more companies are accumulating debt to the state and social security budgets due to the arrearage that is expanding in the economy: the decline of sales brings about a cash deficit that renders suppliers of goods and services unable to collect their money, and as a result payments to the budget are postponed. The situation is also made worse by the drastic reduction in the financing granted by banks for working capital. According to NBR’s economic conditions survey conducted in May, the arrearage has become one of the biggest problems for managers, especially in the construction sector, in the chemical, IT and radio-TV industries.
Tanasescu, Romania’s representative to the IMF says the slight rebound of the Romanian economy in April, with rising budgetary revenues was cancelled by May, which shows economic decline and implicitly lower budgetary revenues than scheduled, that is a rising budget decline.
Tanasescu forecasts that the agriculture will seriously shrink, leading to a decline of more than 4% of GDP, with an impact on the budget; the summer months could bring a slight rebound in services and construction sectors; the amounts drawn from the domestic market and from the World Bank and the EU will not be enough to cover this year’s budget deficit; the economy could revert to growth as late as in 2011 and banks are determined to continue financing the economy.

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