Basescu met a delegation headed by Ponta Tuesday evening to settle a dispute regarding the country’s latest memorandum of understanding with the International Monetary Fund, after the president announced Monday evening he would not sign the document because of a new tax on fuel announced by the government and stated in the memorandum.
Speaking after the meeting, Basescu said the prime minister was inflexible on the excise duty issue.
Ponta said earlier Tuesday Basescu reconfirmed he would not sign the IMF memorandum and would reject the country’s draft budget for 2014.
“My refusal to sign the memorandum of understanding with the IMF, the European Commission and the World Bank will not affect Romania’s loan agreement with the IMF and the European Union,” Basescu said.
The two-year precautionary loan program may be suspended only if the country fails to observe the macroeconomic requirements set when the deal was signed, he added.
The president proposed cutting financing for the Ministry of Development instead of increasing excises on fuels, and added that, by reducing state budget expenses Romania will stay within the deficit targets set with the IMF.
The IMF’s executive board in September approved a new EUR1.98 billion two-year precautionary credit line for Romania, the third financial package the eastern European country has received in the last four years.
Romania also requested EUR2 billion in financing from the European Union, while EUR1 billion remains available under a World Bank policy loan.