Romania Promises To Revive Privatization Program

Romania's Government engaged, in the supplementary Memorandum of Understanding agreed with the International Monetary Fund and the European Union, to start privatization or closedown procedures for thermal power producer Termoelectrica and to sell the main stake in rail freight company CFR Marfa.

Termoelectrica and CFR Marfa are among the ten state-owned companies under IMF monitoring.

The Government also promised the country's privatization authority AVAS will complete in 2010 the sale of 18 state-owned small enterprises and will cede its minority stakes in at least 150 companies.

Moreover, the Economy Ministry will initiate the sale of minority stakes in several companies within its portfolio.

Economy Minister Adrian Videanu has recently said that three of the ten companies under IMF surveillance, namely pitcoal mining company CNH, Termoelectrica and power producer Elcen Bucuresti, comply with the performance criteria negotiated with the IMF for the first quarter of 2010.

For CFR Marfa, the government has already implemented a staff cut program including 10,300 layoffs, of which the first 4,000 people had been dismissed early March. Transport Minister Radu Berceanu said the privatization procedures for CFR Marfa will start this year.

An IMF mission arrived in Bucharest April 27 for the fourth review of Romania's performance under a EUR13 billion loan package signed last spring. Following the mission, the IMF will decide whether to disburse a fifth installment to the country, worth EUR850 million.

However, the money is conditioned by Romania's ability to implement a series of drastic spending cuts in the public sector aimed at boosting revenue and containing a growing public deficit.

Romania and the IMF have agreed to a budget deficit of 6.8% of the gross domestic product in 2010, from an initial target of 5.9% of GDP.

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