They said Romania recorded significant delays in adopting a series of fiscal, social and economic reforms agreed with the IMF, the European Union and the World Bank under a two-year precautionary loan agreement signed in April 2011.
“This agreement was a disaster. We haven’t done any of the things we said we would; on the contrary, in 2012, we’ve managed to turn around some of the good decisions we made earlier,” economic analyst Florin Catu said. “The only positive scenario would be for Romania to honor its initial commitments and complete this agreement.”
Completing the initial agreement with the best possible results is vital if Romania wants to obtain good terms under a possible new agreement with its foreign sponsors, said Daniel Daianu, former economy minister and economics professor.
“The better we can complete this agreement, the better the terms of a new arrangement. Conversely, if Romania doesn’t sign a new agreement, then it can show investors that it has had good performances and it doesn’t need another deal,” Daianu said.
He said Romania might not be able to negotiate a new multilateral deal because of the many countries requesting IMF and EU funds.
Raiffeisen Bank’s chief economist Ionut Dumitru said in turn that the government could seek an extension of its current agreement to buy some time and complete its obligations.
“So far, the program has failed to produce the expected results, namely boosting economic growth via structural reforms. It seems rather early to talk of a new agreement since we still have to complete the terms of the existing one,” said Dumitru, who is also the head of the country’s Fiscal Council.
Romania and the IMF signed a EUR3.6 billion precautionary loan agreement in April 2011, successor to a larger EUR20 billion international bailout package received during 2009-2011.
The agreement is supplemented by a EUR1.4 billion loan from the EU and another EUR1 billion from the World Bank. So far, the authorities in Bucharest have not drawn any funds.
The Eastern European country said recently that it plans to secure a new loan from its foreign creditors, but didn’t specify how much it hopes to obtain.