POLITICAL UNCERTAINTY PUTS OFF THE MISSION OF THE IMF INDEFINITELY: The agreement with the IMF, on hold

• On December 10, the Romanian authorities were supposed to receive the visit of the IMF mission, which would decide on whether the IMF would disburse the EUR 1.5 billion third tranche of the loan

• The challenge of the outcome of the presidential elections and the procrastination of the appointment of a new government will delay the mission of the IMF indefinitely

• Lybek: "We are ready to come in when the Romanian authorities will be ready"

The next evaluation mission of the IMF, on which depends the awarding of the third tranche of the loan, will take place when the Romanian authorities will be ready, Tonny Lybek, the IMF representative for Romania yesterday announced.

His statement comes just as tomorrow, on December 10, the delegation of the IMF was scheduled to arrive in Romania, and after the evaluation of the economic program of the Romanian government, the IMF mission was scheduled to release the EUR 1.5 billion tranche which is needed to pay pensions and salaries.

"We don"t have set dates for the coming missions, nor does the World Bank, but we are prepared to visit when the Romanian authorities will be ready", said Tonny Lybek.

The fact that the IMF officials did not set the dates for the next missions is due to the uncertainty of the political scene, which drag on due to the delayed validation of the presidential elections and the absence of a fully powered government which could carry out the terms of the agreement with the IMF.

Romanian authorities had made several commitments to the IMF, namely to pass the Law on Pensions, the Law of Fiscal Responsibility, The Law of Unified Wages, or the Law for the 2010 budget, which was supposed to be passed before the arrival of the IMF mission on December 10th.

Besides, out of the foreign financing package, the Romanian authorities could only count on the IMF tranche by the end of the year, as the disbursement of the EUR 1 billion tranche from the European Commission, which was needed exclusively for the financing of the budget deficit which was scheduled for December was postponed until January 2010.

Without the billions of Euros from the IMF and the European Commission, the Romanian authorities will be forced to borrow from the domestic market at higher interest rates and at the same time raise part of the cash that companies need to pass the

economic deadlock.

• Unless the political crisis ends, the money will be received in March 2010

The IMF representative of the IMF recently warned that if the political uncertainty in Romania continues, the IMF may only disburse the third and fourth tranches together in mid-March, as the evaluation mission for the disbursement of the fourth tranche was scheduled for the end of January early February 2010.

At the time, Lybek also said that he would like to see the Romanian authorities come up with a credible budget for 2010, with clearly defined expenses, according to the expectations of the Fund, and which would meet the 5.9% deficit set by the IMF.

The IMF envoy for Romania reiterated this aspect yesterday, emphasizing that the Fund is not willing to negotiate the budget deficit target, even if the political crisis were to continue.

Lybek said that the 5.9% budget deficit target is "high enough as it is" and said that there are several alternatives being considered in order to allow it to be met.

The IMF official declined to mention any ways of cutting budget expenses and said nothing of any possible VAT hike or public sector layoffs, even though he hinted the latter may happen, estimating that unemployment could rise to la 9%-10% next year.