Romania Must Approve Pension System Changes in Order to get Next Installment of IMF Loan

1 September 2010 (PLANSPONSOREurope.com) Romania must prove it paid overdue debts to private companies and approve changes in its pension system by the end of September to unlock the next installment of its bailout loan, the International Monetary Fund (IMF) has said.  

The government will have to produce documents showing it has made 1.9 billion lei in payments to health- care companies before the IMF board meets in late September, Tony Lybek, the fund’s representative for Romania and Bulgaria, said in an interview with newswire Bloomberg.  

Lawmakers must also adopt a law streamlining the public pension system and increase the retirement age by late September to qualify for the next payment, Lybek said.  

Romania is scheduled to receive about 900 million euros as the next tranche in a 20 billion-euro bailout from the IMF, European Commission and other international lenders. The European Union’s second-poorest country took the loan last year because of dwindling budget revenue and pressure on its currency.  

The IMF allowed Romania to forgo the overdue debt payments before approving the previous five installments totaling 10.7 million euros.  

The next IMF mission will come to Bucharest in late October or early November, and the fund’s board will meet to decide on that review of the loan program in the second half of December.  

Romania’s economic contraction slowed to an annual rate of 0.5 percent in the second quarter, after a 2.6 percent decline in the previous three months, the National Statistics Institute said in August. The economy expanded 0.3 percent from the previous period, its first quarterly growth since 2008.  

The IMF estimates Romania’s economy will contract for a second year in 2010, shrinking by as much as 1.9 percent because of weak domestic demand, before growing by as much as 1.5 percent in 2011. 

Katherine Blackler
editors@plansponsoreurope.com