Increasing debt under the watchful eye of the IMF...

• The arrears of six of the ten state owned companies watched by the IMF continued to increase in the first quarter

One of the tough measures that was agreed upon with the IMF, which was intended to rebalance the public budget deficit was to drastically reduce the outstanding arrears of major state owned companies.

For this reason, in January, the government devised a plan intended to help reduce the arrears of state owned companies that proved to be literal black holes for the state budget.

Ten state owned companies, most of them controlled by the Ministry of the Economy and the Ministry of Transports, went under the surveillance of the IMF experts.

The Romanian authorities had made the commitment to reorganize the highly indebted companies in order to make them profitable, as well as to lower the budget deficit, which is the "hot button" topic of the moment, as the alternatives are either expanding the tax base or raising taxes.

However, this was four months ago, and the problem has only gotten worse since then.

Laying off staff didn"t seem to help, as six of the ten companies that were being monitored by the IMF saw their arrears increase in the first quarter of 2010

• "The black holes" have gotten larger: arrears increased by 48.9 million lei

One such example is Compania Naţională a Huilei (CNH - the National Coal Company), whose arrears to the state budget increased by 39 million lei in the first quarter (around 10 million Euros), as demonstrated by the lists of major corporate taxpayers with arrears to the National Tax Administration, on December 31st 2009 and March 31st, 2009.

At the end of last year, the arrears of the National Coal Company amounted to 1.539 billion lei, and after the first quarter of 2010, its arrears had increased to 1.578 billion lei.

Another example (this time we"re referring to the company controlled by the Ministry of the Economy) is Termoelectrica, whose arrears to the state budget have increased by 9.9 million lei (approximately EUR 2.3 million), from 59.4 million lei at the end of 2009, to 69.4 million lei at the end of Q1 2010.

• Romanian Railway Company goes off the rails: 56.1 million lei in arrears to the state budget

The companies included on the IMF"s watchlist controlled by the Ministry of Transport, saw their arrears increase as well in the first quarter of 2010.

CFR SA (the Romanian Railway Company) owes 25 million lei (around EUR 6.2 million). At the end of last year, CFR SA owed 128.3 million lei, and at the end of March, the outstanding debt had increased to 153.6 million lei.

The debts of CFR Călători also increased 4.2 million lei (around EUR 1 million). The company"s arrears stood at 15.2 million, on December 31st 2009. At the end of March 31st 2010, the company"s total debts, stood at 19.4 million lei.

The arrears of CFR Marfă (the freight division of the Romanian railways), increased only 2.9 million lei.

At the end of December 2009, CFR Marfă had 64.6 million in arrears to the state budget, and by March 31st 2010, its total arrears had increased to 67.5 million lei.

Last but not least, the arrears of Electrificare CFR increased by 24 million lei in the first quarter, (roughly EUR 6 million), from 162 million lei at the end of last year, to 186.1 million at the end of March.