A Memorandum of Understanding on the stand-by arrangement will be signed with the IMF by February 8, deputy PM Adriean Videanu informed yesterday upon discussions with the Fund's mission in Bucharest.
The mission will remain in Romania until the document is completed, he specified -- signalling executive's intention for a quick settlement. The MoU will harmonise the future policies with the fiscal adjustments already operated by the newly appointed government [i.e. lower income and profit tax rates]. The Fund has understood the need for having the pensions re-calculated [to bring all of them at comparable level] but insists on cutting the quasi-fiscal deficit, Videanu explained. This implies fewer subsidies to loss making state enterprises and higher energy prices.
And indeed, PM Calin Popescu Tariceanu insisted in his statements on the energy price hikes, "which have lagged behind the schedule in some cases" -- as one main element of the talks with the Fund's mission. In regard to the fiscal deficit -- previously indicated by the IMF resident representative as being critical for this year's disinflation -- there is no agreement yet, as the Fund insists for 0.7%-0.8% of GDP and the government officials still hope for a 1.5% ceiling -- as explained by deputy PM Videanu.