A green light for Romania: The International Monetary Fund and the European Union say they will resume crisis aid. This will ease some pressure in one of the EU’s poorest members, as it was hit particularly hard by the global economic downturn; government debt shot up, and national income sank.
The IMF will unblock 2.3 billion euros in February and the EU one billion. Major institutions suspended new aid to Romania in November, over political turmoil. A week-long visit by donor experts has now ended; they said the government’s programme is broadly on track.
IMF mission chief Jeffrey Franks said: “Achieving a deficit under 5.9 percent of GDP for 2010 is a key step in the process of fiscal consolidation in Romania, and is the key measure that has helped unlock the reviews of both the IMF and the European Union.”
This comes soon after re-elected centre-right President Basescu’s government passed an austerity budget, hoping, as a political crisis receded, to pry the country out of fiscal paralysis.
Yet liberal opposition MEP Ramona Manescu speculates that the impact on ordinary Romanians will be negative. Manescu said: “In the beginning, the government took a wrong decision and negotiated the conditions of this loan very poorly with the IMF. Now, because of the IMF policy, we are in a position to put the most pressure to the citizens. In a time of crisis it is not a good idea.”
Reform of the pension system and public sector salary cuts are among Basescu’s prickliest priorities. A threat of strike looms with talk of 100,000 civil service layoffs.