Comments on: Harsh IMF approach courts disaster in Romania Mon, 26 Sep 2016 03:26:00 +0000 hourly 1 By: Kor Mon, 18 Jun 2012 07:54:53 +0000 Four months later we can clearly see that the situation is up-side-down. Now countries like Portugal and Spain have serious financial problems, while Romania has none of this kind. Portugal expects a -3.1% decrease of the economy, while Romania expects for a positive 1.2% to 1.5% growth. That not means the crisis is over, but that does not mean, either, that IMF killed Romania. Overstating a little bit, we can say even that IMF killed Portugal when they treated it so kindly in the past :)

As a general remark: the countries with problems (Romania included, of course) are the countries which are not able to collect properly the taxes and which spend inadequately the lent money. IMF just points out to those two diseases while borrowing their money.

By: ZBan Mon, 13 Feb 2012 15:35:54 +0000 This is not just an issue of a honest policy mistake. It is wilful predatory behaviour, meant to further the interests of global finance. What is happening in Romania and Hungary with the IMF and its suporters is naked financial agression. This has been especially evident given the obviously coordinated attack on Hungary in the past few months, which included the IMF, the ratings agencies and western media and political establishment as levers to push Hungary into begging for a loan, which in fact will destroy that country systematically, just as it did to Romania. The most recent attack on Hungary came in the form of the EU effort to banckrupt Malev, which will leave Hungary on the hook for $2 billion in penalties to be paid to the recently privatized Budapest airport. The damage to Romania’s long term health is greater than this article reports. I recomend to you read an article published a few weeks back, which was in response to a Reuters article attacking Hungary in a rather shameless way. The article’s title is “Hungary and Romania, bad slave and good slave of global finance”, and it is available on: m/

By: atalossofideas Fri, 10 Feb 2012 09:33:22 +0000 I wonder if the author of this article has ever been to Romania. The article seems to be written after doing some reading in the media. I doubt the IMF is bringing the country to the brink of disaster. Lets put some of the facts presented here in context: Yes, salaries in the public sector have been cut by 25%, but prior to 2008 public expenditure on personnel rose by 120%. This also coincided with a surplus of 200,000 employees in the public sector. If I am not mistaken Romania entered the crisis with 7% budget deficit. Any sane govt would have tackled the issue; VAT of 24% is high, but it solved the deficit problem.

Please explain to me, in what way is Romania’s democracy fragile? A few hundred people took to the streets to express their discontent with health sector reform (get your facts right!) and this provided the opportunity to vent frustration accumulated during the past 3 years. Yes, the PM resigned, but a new govt was installed. Elections are scheduled for autumn. How long did it take to install a government in Belgium? I hear they have a strong democracy.

By: bvrabete Thu, 09 Feb 2012 21:13:23 +0000 IMF did not ask to cut the public sector wages by 25%; it asked to reduce the bloated public sector. It was Romania’s government choice to do a blanket cut instead of closing unnecessary public sector jobs.
The authors imply Boc’s government was reformist and the protester are anti-reform. Until pushed by IMF Boc’s government did absolutely no reform. The protests were triggered by “reformist” zeal of the past government who wanted to replace a working public-interest service (funded by private donations) and replace it with a private scheme where people close to the governing party would win the business.

The crude fiscal austerity is caused by the lack of reform and inability (or rather unwillingness) to identify the main causes for the budget deficit: bloated public sector, siphoning of funds from state owned companies, overpriced contracts won by party friendly companies. That and the endemic corruption is the problem and not IMF austerity.
The governments was brought down not by public protests directly; it is a last ditch attempt to salvage whatever political capital the ruling party has left.

By: Nuca Thu, 09 Feb 2012 21:12:18 +0000 Dear Martin & Chris, as you probably already know, the austerity measures you are talking about were taken in 2009, which is almost TWO years ago. i.e. they are past tense now. Funny thing you may call it, but in the meantime, consumption has started to show signs of stabilization and even a small recovery. So, please, next time when you write another article with such a bombastic title, please choose your words carefully. As you well know, media has a very important role in investor sentiment, especially when it comes to small EM countries. Maybe IMF has put a cap on GDP growth but the RO gov’t has a pretty strong pipeline of IPOs this year and articles like yours ain’t helping the country either!

By: alex_i Thu, 09 Feb 2012 20:43:31 +0000 i love the kind of left wing rhetoric that crops up at times. it’s refreshing to see that after having ruined Europe, the left just doesn’t give up.

Ok, so the fund lends money. As any lender, they wish to see the cash returned and so they impose conditions. The effects of said conditions must be easily quantifiable. Setting aside the large pre-crisis increase in both number of government employees and compensation per gvt employee that Romania suffered, one can clearly agree that it is not the domain of the IMF to oversee much less quantify the effect of anti-corruption reform or any other structural reform.

If one does take into account the greek style expansion in government employee related expenditure the gvt undertook in 2007-08 (FAZ journalist’s terminology, not mine), one can look at the subsequent reduction in per employee compensation as an after election return to so-called normality rather than as a draconian measure. A necessary measure. Perhaps the authors should widen their research to include a 10 year growth in per eployee as well as number of employee increase rather than only focusing on the post (intra??)- crisis evolution of said indicators.

I would also suggest that the authors consider the ratio of government employees to private sector ones and draw their own conclusion as to the necessity of criticized measures undertaken under the guidance and political responsibility shielding of the fund. I am certain that the authors would then come to the conclusion that the number of public sector employees is quite large (even unsustainable) in comparison with their private sector counterparts. As a side remark, I am certain the same conclusion can be drawn about the number of people relying on pensions.

To conclude, one cannot ignore the context in which such so-called draconian measures were taken. One must also look at the mandate and tools of the IMF. Structural reform is more the domain of the EU rather than the IMF.