IMF, Romania start key talks on reforms, draft budget

(BUCHAREST) - IMF and EU experts opened talks with Romanian officials on Tuesday on the 2013 draft budget and progress on reforms, seen as crucial for consolidating investors' confidence.

The negotiations scheduled to last until January 29 will be the first test for Victor Ponta's centre-left government, in office since December.

Ponta has said on several occasions that he wanted to conclude a new deal with the International Monetary Fund when the current agreement expires in March.

But late Monday he acknowledged his government was running behind on several commitments, including the sell-off of shares in major energy and transport companies.

"We will try to obtain a prorogation of the deadlines by three to five months, because 2012 was a difficult year, with three governments and three rounds of elections," Ponta said, quoted by Mediafax news agency.

Last week the prime minister said that a new deal with the IMF "would be beneficial both in terms of cheaper borrowing and as a message of stability sent to foreign investors."

As he unveiled the broad lines of the 2013 draft budget, he pledged to tighten fiscal dicipline and eliminate the waste of public funds.

The draft budget, to be submitted to parliament after it is okayed by the IMF, targets 1.8-percent economic growth and a public deficit of less than 2.0 percent of annual output.

In May 2009, Romania obtained a 20-billion-euro rescue package ($24.7 billion at current exchange rates) from the IMF, the EU and the World Bank in exchange for drastic spending cuts.

In March 2011, the IMF and the EU agreed to provide a fresh credit line of 5.0 billion euros, to be drawn down only in case of emergency.