One week late, the IMF is still coming in on time

A mission of the IMF will arrive today in Bucharest, for the second evaluation of Romania"s economic program.

The IMF mission, initially scheduled to arrive one week ago, had been postponed because of political instability, but eventually accepted the invitation of President Traian Băsescu, to come to Bucharest even with an interim government in place and begin the talks.

At stake are about 1.56 billion Euros - the last installment for 2009 of the loan taken out from the IMF, which according to the schedule initially set with the IMF was to be received on December 15th.

There are voices that claim that since the visit of the IMF was postponed for a week, it"s possible that due to bureaucracy in Washington and complex procedures, the last installment would be received one week later, namely on December 22nd.

Interim minister of the Economy Adriean Videanu denied this could happen, saying that this depends exclusively on the evaluation of the IMF and not on the postponement of the visit to Bucharest.

The money in the last installment could be used for the payment of wages and pensions, as well as for investments, and losing it could essentially mean the impossibility to honor these commitments. Should we fail to receive this money, Minister Videanu warned that the "Government will decide where to perform cuts, either from pensions and salaries, either from investments".

According to interim prime-minister Emil Boc, the government is ready for the visit of the IMF scheduled between October 28th - November 9th, and he said that there would be no need for the renegotiation of the agreement with the IMF this year.

"The interim Boc government has no difficulties in drawing the last installment of the IMF loan, as this loan agreement has already been approved through a bill which has become law", said Adriean Videanu.

The budget deficit is below the value of 5.5% agreed upon with the IMF, Boc says, (5.4% on October 1st), and the ball is now in the Parliament"s court, concerning the passing of the laws agreed on with the IMF and the European Commission.

According to Boc, given the fact that his government only has limited attribution, by the end of the year the Parliament has to pass the Law of the public budget, the Law of pensions and the Law on fiscal responsibility.

"These are the most important terms of the agreement with the IMF and the European Commission. So, for 2009, if the Parliament does what it is supposed to do, we"ll be on schedule; if it doesn"t, we"ll be in trouble ", said Emil Boc.

Also, the Law of Unified Wages was supposed to be ready by October 31st, according to the agreement with the IMF, but it was blocked by the Constitutional Court.

"I feel that the IMF needs to accept the resolution of this kind of issues through their legal method, and the Fund has proved flexible on the matter of unified wages", says Adriean Videanu, when asked about the failure to fulfill this objective.

In turn, vice-president of the PSD, Ilie Sârbu said that Romania could however have problems with staff cuts and with the Law of pensions.

Ilie Sârbu said: "The fact that the Law of unified wages was stuck is not imputable to the Boc government. However, the bills for laying off 20% of public sector workers have not been passed. Another possible problem is the law of pensions, which needs to be adopted by December 31st".

In theory, until the granting of the third installment in mid December, a lot of the political issues should be out of the way, following the presidential elections and the validation of the new president. Even if the crisis were to continue, with the president dissolving the parliament and coming to early presidential elections,

the granting of the last installment doesn"t seem to be at risk.

Minister Videanu said that failing to receive the rest of the loan is out of the question as the Boc government will continue to act as interim government, until the new Executive is sworn in.

Former minister of the Economy and PNL senator Varujan Vosganian is not concerned with the risk of Romania losing the third installment due to the political crisis which could culminate in the dissolution of the Parliament.

"The IMF has insisted that we take this loan, so it"s out of the question that they would suspend the agreement", Vosganian said. Ilie Sârbu has a similar opinion: "The IMF will most certainly take all the necessary precautions before lending us the money".

foto>Interim Prime-Minister Emil Boc: "Romania has honored all its commitments. There is no need to renegotiate all its IMF agreements ".