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Romania: Good Omens For Economic Reform

  • Radu Busneag



Bucharest, 3 June 1997 (RFE/RL) -- Today is an important day in Romania's economic reform process and the omens are good. Approval is expected from the World Bank for loans totalling some $700 million, designated to help the reforms. And in the Romanian parliament today, Prime Minister Victor Ciorbea presented his government's reform program to a joint session of the two chambers.

The board of directors of the World Bank is scheduled to examine a package of loans designated to support government programs seeking to improve Romania's agriculture, transport infrastructure, and education, and to help enterprise restructuring and financial sector reforms.

While in Bucharest, in mid-May, World Bank President James Wolfensohn praised the reforms and said the Washington-based body will have no reticence when asked to approve the loans.

The exact amount of the loans expected is some $705 million. From this, some $350 million are dedicated for restructuring the farm sector, $150 million for roads rehabilitation, $50 million for the welfare system, $50 million for education projects, $25 million for improving the water supply system and, finally, $80 million representing a second installment of a previous loan for enterprise restructuring. This year, Romania is entitled to receive only $380 million for three projects. The rest is scheduled for 1998.

The loan's approval will not mean necessarily that Romania will receive all the money. Wolfensohn made it clear that the installments are to be disbursed only after it's proved that the Romanian economy has met performance criteria established by the International Monetary Fund and The World Bank. The IMF approved loans totalling over $400 million for Romania in April. A first reform review is scheduled to take place later this month.

In parliament, Prime Minister Ciorbea submitted a document called "the program for global reform of Romanian society." He asked the legislative body to give him a free hand for the entire reform program, including the agreements with the international financial institutions.

In the same parliament session, the opposition, under the direction of ex-president Ion Iliescu, now a senator and leader of the reformed communists, will submit a no-confidence motion. The vote on that is scheduled for Friday. Analysts say the motion will be easily rejected by the comfortable majority that the ruling coalition controls in the Parliament.

An RFE/RL correspondent reports that five months after the start of the reform programs, amid austerity, high inflation and price hikes, the government still has a good level of public support. An opinion poll released three days ago indicates 50 percent of the population is optimistic about the success of the reform process, with only 19 percent believing it will fail. Also, 54 percent of those polled said they agree with the sacrifices needed in this period.

Our correspondent says the latest economic data, released last week by the National Commission for Statistics (CNS), illustrate mixed results. The trade balance deficit in the first quarter topped $360 million -- down from the same period in 1996, thanks to growing exports and decreasing imports. Taking the biggest share of Romanian exports was Italy (19.6 percent of total volume), followed by Germany (18.9 percent), with France and United States following. The top exporters to Romania were the Russian Federation (16.1 percent), Germany (15 percent) and Italy, (14.5 percent).

The average monthly inflation rate between January and April was 17.2 percent, well up on the same period last year. Inflation in April however was 6.9 percent, the lowest rate this year and down from 30.7 percent in March. Industrial output continued to fall in absolute terms fell in April, being 11.8 percent lower than March.
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