According to Franks, demand in the healthcare sector is higher than available resources, which weakens the system’s financial stability.
The IMF mission chief highlighted the country needs a comprehensive reform in the healthcare system and added the Government will soon start reforms targeting the sector’s revenue and expenses.
Romanian President Traian Basescu said Sunday, after the meeting with the IMF, European Commission and World Bank delegation, that the Government cannot increase the healthcare budget until the sector’s expenses are put in order, even though it is underfinanced. Basescu said the healthcare system is underfinanced because of the low employee contribution to the health insurance fund and the low number of contributors compared to beneficiaries.
State arrears represent another problem Romania must deal with.
Romanian authorities eliminated almost all state and local arrears and made an inventory which showed state enterprise arrears stand at over 20 billion lei (about EUR4.71 billion), said Franks.
Romania pledged in its negotiations with the IMF to reduce state enterprise arrears to RON18 billion by the end of the year.
According to the IMF official, Romania should increase state investments and boost its EU fund absorption rate.
The fourth and most difficult issue the country must solve is implementing thorough reforms targeting state companies.
According to Franks, the Romanian Government decided to totally or partially privatize state-run companies. He encouraged the Executive to do more in this field.
The Government pledged to sell stakes of 10% in state-run energy producers Hidroelectrica and Nuclearelectrica by December this year. Romania also wants to sell stakes of 15% in Transelectrica, Transgaz and Romgaz by year-end, and stakes of 20% in freight railway company CFR Marfa and airline Tarom.
End-July, Romania’s attempt to sell a 9.84% stake in top oil company OMV Petrom (SNP.RO) was unsuccessful. Authorities said at that time they would reschedule the sale most likely in the first half of 2012.
Finance Minister Gheorghe Ialomitianu said Monday this year’s budget revision will focus on allotting money for investments, creating new jobs and paying arrears in the healthcare sector.
Prime Minister Emil Boc said recently the Government will conduct this year’s first budget revision in early August, with priority granted to allotting additional resources for investment programs, especially those run by the Ministry of Transports.
Joint teams from the IMF and the World Bank visited Romania for the second review of a EUR5 billion precautionary loan arrangement.
The eastern European country has met all its targets for the first half of 2011, with the exception of the general government arrears, Franks said at the mission wrap-up. (EUR1=RON4.2403)