Exclusive: The IMF is pressuring the government to pay its debts towards companies

Unhappy with the fact that the authorities in Bucharest missed the arrears target for the fourth time in a row, the officials of the IMF are pressuring the government to begin the payment of its debts to the private sector as soon as possible.

Jeffrey Franks, the head of the IMF mission in Romania, gave an exclusive interview for BURSA, in which he talks, among other things, about one of the largest problems that the private environment is facing, that is, the state"s unpaid debts.

The head of the IMF said: "We are concerned about the fact that the balance of arrears is not decreasing and we absolutely must see an improvement in this regard in the third quarter of this year".

So far, the evaluation of the IMF showed that all the criteria imposed by the Fund were met, with the exception of arrears, for which the target was missed every time.

As a result, the Government has again asked for a derogation from the payment of arrears, but only until the month of September, when it is supposed to pay 1.9-2 billion lei.

Jeffrey Franks explained that he will only be able to request a new derogation for Romania"s arrears, if it is seen that serious efforts are being made to solve this problem: "We are aware of the fact that the state is facing several problems when it comes to arrears. The lack of money and the difficult monitoring of arrears by the Ministry of Finance are the main reasons why Romania ended up in this situation. That is why we are currently working on improving the control system for arrears, to first of all put a halt to the increase of the state"s unpaid debts towards companies".

The officials of the Fund provide two solutions for reducing arrears, namely avoiding the occurrence of new ones, as well as the payment of the existing ones.

"Stopping the increase of arrears means that we need to completely revise the system and we can say progress has been made in this respect. For the second case, we have already asked the government to set aside two billion lei, for the second quarter, in order to pay off part of the arrears", said the head of the IMF mission in Romania.

The schedule concerning the arrear targets negotiated with the IMF in the month of February provided that the volume of arrears was supposed to be reduced to 1.27 billion lei at the end of March, to 1.09 billion lei at the end of the first semester, 810 million lei after the first nine months and 480 million lei at the end of the year.

The budget arrears need to be eliminated by the end of April 2011, when the program of the IMF is scheduled to end.