The IMF Mission in Romania agreed today on a three-month extension of its aid programme so that the Romanian Government manages to reach its targets. Basically, at this point Romania failed to reach the estimated growth indicators (almost null in 2012), as well as it failed to further structural reforms and attract more European funds.
It is no wonder though, as last year was eminently an electoral year with local elections in June and general elections in December 2012, not to mention the President’s impeachment in July. To this adds at least two salary increases for the public sector personnel which significantly reduced the allocated funds meant for investments and job creation. Salary increases were not only electoral incentives but mostly a to-do task to atone for the austerity – 25% cuts implemented in 2010.
Although the IMF agreed today that Romania should be credited with three more months, it is highly doubtful that the existent agreement (a $5 billion precautionary loan from the IMF) can be sustained beyond this margin since grey areas as the state-owned companies have escaped privatisation and continue to widen the GDP black hole.
A second programme extension is certainly not an option and a new aid scheme depends on the Government’s will to reach indicators.
