Romania’s new IMF loan conditionality criticised

2 December 2013

In late July, the IMF approved Romania’s request for a precautionary stand-by arrangement (SBA) to the tune of € 1.98 billion ($2.7billion), its third deal in five years. The arrangement will provide the Romanian government with a financial buffer, but expectations are that it would remain unused. Nemat Shafik, deputy managing director of the Fund, said the two-year deal “will support policy continuity, provide a reserve buffer, and catalyse growth-enhancing reforms.” Under the new deal, the government will focus on structural reforms, such as overhauling the health-care system and plans to sell state-owned transport and energy companies. However, Daniela Gabor of  Bristol University, questioned “the pervasiveness of structural reforms in IMF advice”. She said, “The IMF has promised to reduce structural conditionality and focus on macro conditions broadly defined. What they are doing instead is to cleverly declare structural reform ‘macro-critical.'” Gabor said by going down this route “the IMF retains the same pre-crisis agenda of liberalisation and privatisation of state-owned enterprises without critically examining why and how this would be beneficial”.