Romanian President Says Govt Found New Ways To Reduce Budget Deficit

The head of state said Romanian authorities want to put forward and discuss with the IMF mission officials the new measures aimed to solve the budget deficit problem.

Prime Minister Emil Boc, Finance Minister Gheorghe Ialomitianu, Labor Minister Ioan Botis and Romanian representative to the IMF, Mihai Tanasescu, also attend the meeting.

People close to the matter told MEDIAFAX earlier Sunday that Romanian authorities’ negotiations with the International Monetary Fund came to a deadlock mainly due to problems raised by a Government emergency ordinance regarding consumer loans.

According to the source, the IMF might even have the loan agreement with the East European country cancelled.

Both the Romanian Government and ruling coalition parties disagree with amending the emergency decree adopted in June, which transposes an EU directive into the local legislation. The new act applies retroactively to existing loans and the banks denounced the measure as abusive.

According to the sources, IMF representatives also rejected certain economic measures proposed by ruling democrat liberals for next year.

IMF officials said that, by lowering the flat tax rate and social contributions, the budget deficit will exceed the 4.4% of DGP target set for 2011.

IMF mission chief Jeffrey Franks said recently Romania must bring its consumer loan legislation in line with European standards to receive new aid from a EUR13 billion International Monetary Fund lifeline.

An IMF mission will be in Bucharest until November 1 to assess the country’s progress under the loan agreement and decide on the disbursement of new aid, worth EUR870 million.