Romania - a test for the success of EU and IMF actions

Publish date: 24-11-2009
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Romania represents a test for the EU and the international financial institutions such as the International Monetary Fund (IMF) and the European Bank for Reconstruction and Development (EBRD). In 2009 they managed to help avoid a banking crisis in Central and Eastern Europe, 'The Times' writes, being quoted by Mediafax. The European Union had a small-scale but surprising success in what concerns the help it gave to the region in order to avoid a banking crisis this year.

The European Commission acted unusually swift and institutions such as the IMF and the EBRD rediscovered their purpose during the world economic crisis, the same daily writes. In Romania, a country badly hit by the crisis, the process of electing the President, a process that started on Sunday, will show whether the Romanians still have the stamina to perform the changes and reforms that the organizations and the financing institutions demand.

Last month the center-left coalition Government was toppled, with the IMF postponing the third tranche of EUR 1.5 billion of a two-year loan package of EUR 20 bln. The postponement will probably last until the formation of a new Government. That could take a long time considering that the current Presidential race turns out to be a close one. The two main candidates - Traian Basescu and Mircea Geoana - have some Western support: Basescu because he 'speaks the language of the markets,' and Geoana partially because of the time he spent as ambassador to the United States, the British daily adds.

But because of Basescu's more aggressive style the investors fear that if he wins the run-off on December 6 he won't be much of a help in forming a coalition. The delays matter, the daily notes, adding that despite the fact that Romania joined the EU in January 2007 the country remains deeply affected by corruption, with Brussels's 'caustic' reports not having much of an effect.

The IMF is currently skeptical in what concerns Romania's capacity to cut back its expenditures or to conduct personnel cuts during the recession. Dominique Strauss-Kahn, the general director of the IMF, recently underlined that the world economy is recovering however it is too early to pull back the re-launch measures and that is why the states have to continue to collaborate. He underlined that the states should try and limit the rise of the unemployment level and should start preparing strategies for pulling back the re-launch measures. The head of the IMF nevertheless warned that these measures have to be continued.

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