IMF, the "bogeyman" of Romanian governments since 1990, might close its Bucharest office, as part of a restructuring process whereby the international financial institution attempts to curb spending.
Sources from financial circles believe the Fund will keep its offices in the Republic of Moldova and Macedonia, where stand-by programmes are still ongoing, while the economic development of other countries in Central and Eastern Europe will be supervised by the office in Vienna.
IMF is still the main critic of the economic policies of the authorities in Bucharest, especially governmental ones, yet over the last few years its recommendations have been given less and less attention.
As Romania pushed closer to EU accession, the government started to feel it no longer needed the IMF. The Fund's departure from Bucharest could be the end of the transition period for Romania, which comes eighteen years after the fall of communism. From 1991 through early 2006, the Fund's office was located in the old palace of the National Bank, but relocated after a fire. NBR has, and continues, to support IMF's operations in Romania, particularly because the critical analyses of the experts in Washington concerning fiscal and wage policies lent support to its own position versus the Finance Ministry and the Government.
With more and more developing countries no longer needing any money from the IMF, the institution's revenues have suffered over the last few years. Given the Fund's efforts to curb spending, the NBR could suggest it to move back into its office inside the NBR's old palace, once renovation thereof has been completed. The team of the IMF office, which also monitors Bulgaria, comprises only five people, with rent being the main expense.
The fund has played an important role in the restructuring of the economy since 1990, and has constantly pressured governments to conduct structural reforms and commit to entire sets of pre-requirements and requirements that range from privatisations to layoffs at state-run companies; arrears and reductions in public spending. Romania has signed ten stand-by agreements with IMF since 1972, with their associated funding, which was possible to draw only in part, because of failure to comply with the requirements set. Several agreements after 1990 failed and were not seen through.
The last agreement, a precautionary deal, was signed on July 2004 at the end of Nastase Cabinet's term, but was dropped by the first Tariceanu government in 2005.
After Romania and Bulgaria joined the EU, the IMF has only monitored the macroeconomic framework in the two countries, and made economic policy suggestions and recommendations. Each year, a Fund mission visits Bucharest to assess the economic situation pursuant to articles_import IV of the institution's charter to which Romania is signed. The Board in Washington then discusses the conclusions. The Fund's analyses are important guidelines for financial markets and major investors.
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