News Column

Romanian President Basescu asks central bank, IMF not to back government's wrong policies

February 12, 2014



Romania's president Traian Basescu expressed disappointment with the central bank and the IMF supporting the government's wrong policies, in an interview to B1 TV station on February 11.

He has vocally criticised the government's actions, implying that the stand-by deal with the IMF cannot continue under the current circumstances and encouraging public protests against the executive. The conflict is visibly related to the political turmoil ahead of the presidential elections this November and European elections due on May 25 – still, the criticism expressed by the president is also fundamentally relevant.

Basescu urged the central bank to immediately cease following the orders of the "corrupt" government*. He explained that the central bank has authored and keeps supporting the government's plan to help low-income bank debtors. The head of the IMF team visiting Romania, Andrea Schaechter, expressed a moderate support to the plan before leaving the country on February 5.

PM Victor Ponta confirmed the central bank's role in designing the plan - Basescu said, adding that the information was also checked from third-party sources. IFIs are also aware of the central bank's involvement in the plan, he added. The plan is only for impressing voters by deferring their bank loan service, Basescu implied, arguing it is equally harmful to the recipients of the plan and to all the taxpayers. In the end, the debtors will pay more and the taxpayers will have to finance part of the rise in the interest paid to banks, he explained.

The IMF experts visiting Romania were wrong to accept the government's plans, Basescu also said in the same interview. The debt deferring plan was pushed by the government in the last day of the negotiations and the Fund's experts were simply happy to wrap up the talks, according to him.

PRESIDENT WILL NOT ENDORSE STAND-BY AGREEMENT WITH THE IMF

The presidency will not endorse the country's agreement with the IMF in case the Letter of Intent includes in any way the government's debt deferral plan mentioned above, Basescu stated. This makes the continuation of the programme highly uncertain.

Basescu also warned that if the government insists on hiking car fuel taxes, he would personally encourage citizens to demonstrate against the ruling coalition since there is no other way he can oppose the government's plans.

* "discontinue following the line of being controlled by a corrupt government", as worded by the president


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Source: IntelliNews - Weekly Reports


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