IMF Asks Romania To Cut The Cord On Big Debtors - Official

The International Monetary Fund recommended the Romanian authorities scrap subsidies for companies largely indebted to the state budget as of next year, an official of the Economy Ministry said Monday.

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Imaginea articolului IMF Asks Romania To Cut The Cord On Big Debtors - Official

IMF Asks Romania To Cut The Cord On Big Debtors - Official

According to ministry's state secretary Tudor Serban, only seven out of the ten biggest debtors to the state budget are likely to stay afloat after the money is gone.

"The subsidies will be granted to at least two-three companies," Serban said after a meeting with IMF representatives in Bucharest.

Serban mentioned the hard coal mining company CNH and railway companies CFR Infrastructura and CFR Calatori as the three enterprises that would require further subsidies in 2010.

He added that the Romanian authorities and the IMF have also discussed about potential layoffs of 1,600 miners and an undisclosed, but lower, number of employees in the energy sector.

Romania and the IMF agreed in the summer on a list of the ten most problematic companies whose financial evolution is to be closely monitored in a move to lower state aid levels.

Aside from CNH and the two rail companies, the list includes the companies Termoelectrica, CNADNR, Metrorex, Electrocentrale Bucuresti, the National Land Reclamation Company, Compania Nationala de Cai Ferate CFR and CFR Marfa.

CNH, which owes 3.64 billion lei (RON-EUR4.3047) to the state budget, is currently Romania's largest debtor.

An IMF mission is in Bucharest until November 9 for a second review of a EUR20 billion loan package the international lender is overseeing.

Romania and the IMF have signed a EUR12.95 billion loan agreement as part of the package, which also includes money from the European Union, World Bank and the European Bank for Reconstruction and Development.

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