The IMF’s executive board has completed the first and second reviews under its current 24-month stand-by arrangement with Romania, started last autumn. In addition, it ran an ex-post evaluation of the previous such 24-month deal carried out in 2011-2013.

The Fund made available SDR 584.1mn (about EUR 654.4mn) under the current stand-by deal, but the government treats the arrangement as precautionary.

The Fund’s remarks were largely positive – with notes on the need for:

• The need to strengthen the monetary transmission mechanism
• The reform of non-bank financial regulator in line with international practices
• Improved capital spending, better revenue collection, and implementation of an expenditure control system
• Measures to protect vulnerable households from deregulated energy prices.

FUND SAYS STRUCTURAL REFORMS NEED LOCAL COMMITMENT. In regard to the previous 2-year arrangement with Romania, the Fund concluded that the “program conditionality, particularly as regards complex structural reforms, is no substitute for country ownership,” which we see as an allusion to the failure of most of the attempts in the structural reforms area during the 2-year period. Petrochemical plant Oltchim's privatisation, the reforms at railway companies CFR Marfa and CFR Calatori and the so-called “private management” programmes at key state-owned companies have all failed despite formal procedures carried out by local authorities.

DATE OF NEW REVIEW UNCERTAIN. The Fund admitted Romania has requested a supplementary review to be carried out based on the end-Jun results. This review would be run concomitantly with the Article IV consultation and would also cover the mid-year budget adjustment. In regards to the next review of the funding deal, supposedly to take place meanwhile, there was no date indicated. Romanian finance minister Ioana Petrescu, in an interview earlier this week, was not able to indicate the schedule for the next review but most likely it will take place around the beginning of May.