Law No. 285 Of 14 December 2011
Original Language Title: LEGE nr. 285 din 14 decembrie 2011
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LEGE no. 285 285 of 14 December 2011 on the ratification of the Letter of Intent signed by the Romanian authorities in Bucharest on 10 March 2011 and approved by the Decision of the International Monetary Fund Board of 25 March 2011
Published in OFFICIAL MONITOR no. 906 906 of 21 December 2011
The Romanian Parliament adopts this law + Article 1 The Letter of Intent *) signed by the Romanian authorities in Bucharest on March 10, 2011 and approved by the Decision of the Board of Directors of the International Monetary Fund of March 25, 2011, which enters into force the new stand-by arrangement between Romania and the International Monetary Fund of preventive type and the stand-by arrangement concluded in 2009 is completed. ---------- Note ... * *) Translation. + Article 2 (1) The Romanian Government is authorized to agree with the International Monetary Fund, through the Ministry of Public Finance and the National Bank of Romania, to agree to the Stand-by Arrangement, without leading to the increase the financial obligations initially assumed by Romania towards the International Monetary Fund. ... (2) Amendments to the stand-by arrangement agreed with the International Monetary Fund shall be approved by normative act. ... This law was adopted by the Romanian Parliament, in compliance with the provisions of art. 75 75 and art. 76 76 para. (2) of the Romanian Constitution, republished. CHAMBER OF DEPUTIES PRESIDENT ROBERTA ALMA ANASTASE SENATE PRESIDENT VASILE BLAGA Bucharest, 14 December 2011. No. 285. + LETTER OF INTENT ROMANIA: LETTER OF INTENT Bucharest, March 10, 2011 Mr Dominique Strauss-Kahn Managing Director International Monetary Fund Washington, DC, 20431 U.S. Dear Mr. Strauss-Kahn, 1. The anti-crisis program supported by the International Monetary Fund (IMF), the European Union (EU) and the World Bank (WB) continued to play a crucial role in stabilizing the Romanian economy, eliminating economic imbalances, regaining confidence financial markets and creating the prerequisites for sustainable economic growth. Economic activity has stabilized and is expected to recover in 2011, registering an increase of 1 'bd percent due to strengthening exports and gradual growth in domestic demand, supported by improvements in view of the economy. absorption of EU funds Inflation fuelled by the recent increase in VAT and the pressures induced by food and fuel prices reached a maximum of 8.0% at the end of 2010. It is anticipated that during 2011 inflation will return in the ranges targeted by the NBR. The current account deficit has decreased considerably from 11.6% in 2008 to 4.5% in 2010. Despite these improvements, the recovery remains vulnerable to negative developments in the international financial markets, which could be driven by rising risk premiums and lower capital inflows, and the negative risks attached. recovery from the euro area. 2 2. Given the strong performances carried out within the macroeconomic program supported by the stand-by arrangement (ASB), the Romanian Government and the National Bank of Romania (NBR) request the completion of the seventh evaluation within the ASB. We are also considering to treat as preventive the last tranche available after the completion of this assessment. Given that the current ASB concluded with the IMF (approved on May 4, 2009) was successful in achieving its main objective of ensuring macroeconomic stability under the economic crisis, we would also like to see it. we finalize this ASB and request the simultaneous approval of a new ASB, lasting 24 months, totaling 3,090.6 million SDR (3.6 billion euros, 300% of Romania's share at the IMF). The new ASB will support our comprehensive programme, for the period 2011-2012, to relaunch sustainable economic growth, to further adjust and mitigate the effects of future shocks should they materialise. Because Romania's international reserves position is a comfortable one and access to external financing is better and better, our intention is to consider this new arrangement as preventive type. EUR 400 million and EUR 1.4 billion of preventive assistance provided under the EU Balance of Payments Facility, this arrangement will reflect the continued support of our policies by the international community. 3. We believe that the policies and measures provided for in this letter are appropriate for the achievement of the objectives of our macroeconomic program supported by the following ASB, but the Government and the NBR are ready to take the additional measures required to ensure achievement of its objectives. Romania will consult with the IMF on the adoption of new measures that could become appropriate to achieve the goals of the program and before changing the policies contained in this letter, according to the IMF policy on such consultations. We will also provide the IMF and the European Commission (EC) with the information needed to monitor the programme. I. Results from the current ASB Seventh assessment 4. Our results with regard to the seventh evaluation were significant (Tables 1 and 2). ● Quantitative performance criteria and indicative targets. The fiscal deficit target set for the end of 2010 was met by a margin of 1/4 percent of GDP, reflecting higher than anticipated revenues. The net foreign assets (AEN) targets set for the end of December 2010 and the end of January 2011 were also met by considerable margins. All other quantitative performance criteria set for the end of December 2010 were met, with the exception of the consolidated general budget arrears, for which an exemption was already granted on 7 January 2011. The indicative targets for loss-making SOEs and current expenditure have been missed. Inflation has remained in the inner range of the inflation consultation mechanism over the entire period. ● Structural benchmarks. The ordinance on individuals with large fortunes was approved at the end of December, as scheduled. There is a complete project plan for implementing the integration of the accounting reporting system with the Treasury payment system. We will ensure the Parliament's approval of the rest of the amendments to the closure framework of the banks shortly, with a slight delay compared to December 1, 2010. By the end of July 2011 we will fine by ordinance the Deposit Guarantee Fund (FGD) legislation in order to allow the use of the resources administered by the FGD (including through guarantees) in order to facilitate the restructuring authorized by the NBR on the transfer of deposits, including acquisition and assumption transactions, in a situation where this use would be less expensive than direct payment of collateral on deposits (structural benchmark rescheduled from the end of March). Existing program analysis 5. In the framework of the existing programme, significant progress has been made in fiscal consolidation and the protection of the financial sector. A structural fiscal deficit of almost 9% of GDP in 2008, which compounded the initial impact of the global financial crisis, was halved by 2010. The measures adopted in 2010 also launched government finances firmly on the path of meeting the Maastricht deficit target in 2012. Measures on the financial sector ensured adequate capitalisation of banks and liquidity in domestic markets, guaranteeing the stability of the banking sector. Massive capital outflows were avoided, in part due to the European banking coordination initiative, and an orderly adjustment of the current account was possible without excessive volatility of the exchange rate. Structural reforms in the areas of tax administration, pensions, pay and employment in the public sector and social benefits have placed public finances on a more sustainable medium-term path and created the prerequisites for More extensive improvements to the business climate. II. New ASB objectives and policies 6. Romania is to benefit from the positive effects of the difficult adjustment measures implemented under the existing program. The new economic programme aims to relaunch potential growth, with particular emphasis on structural reforms, while ensuring fiscal and financial stability. In this context, starting from the significant achievements of the current ASB, the main objectives of the new programme are: (i) the continuation of the tax adjustment process, while at the same time broadening the scope of the tax adjustment to include revenue, expenditure and arrears; (ii) the continuation of the effort to cultivate confidence, facilitate greater flows of private capital and generate sustainable growth; (iii) relaunching the growth potential through structural reforms and a greater flexibility of the economy, which will allow the continued growth of competitiveness as Romania prepares to join the euro area. Macroeconomic framework for 2011-2012 7. After a severe recession between 2009 and 2010, there are signs that economic activity is recovering. From around 1 'bd percent in 2011, growth is anticipated to gain momentum in 2012, reaching 4-4 'bd percent. Domestic demand will gradually become the main driver of growth, supported by better absorption of EU funds. The increase in net foreign demand will calm, in line with the moderate growth of export markets, leading to a stabilization of the current account balance at about 5% of GDP. Increased confidence among investors, coupled with planned privatizations under the program, will bring new foreign direct investment (FDI) and bank capital inflows. Fiscal policy 8. For 2011 we are determined to achieve the previously agreed fiscal deficit target of 4.4% of GDP (or 5% in ESA terms). We approved the 2011 budget in line with the commitments we have made previously. On the revenue side, the main components of the tax system will remain unchanged. We will seek technical assistance from the IMF and the WB, in order to benefit from a comprehensive analysis of the tax system, in order to ensure a neutral tax simplification in terms of revenue. Should the economic recovery create enough fiscal space, we will consider the possibility of a gradual reduction in social contributions, the incidence of which encroaches on competitiveness, job creation and social security practices. on the labour market On the expenditure side, the salary envelope will be maintained within the agreed limits, the increase of the nominal salary being compensated by the elimination of the thirteenth salary and the holiday premium. We also maintained the freezing of the pension point The reduction of the number of employees in the budget sector will continue through the policy of replacing a single employee in 7 who leave the system, on average across the public sector. We remain committed to implementing recently approved legislation in the field of wage and pension reform, which will generate substantial savings in the coming years, while protecting the viability of the pension pillar 2. As a result of the recent action to incorporate incentives into the basic salary, we will remove by ordinance the Government the legal basis of incentive funds, with entry into force from January 1, 2012 (structural reference criterion for the end June). To boost tax collection efforts, employees involved in tax collection can benefit from performance premiums within the corresponding 30% limit for bonuses (as defined in the implementing legislation). for consistently improved results in revenue collection. Other savings are provided from the reform of the social welfare system. By the end of July we will improve legislation to provide heat aid to members of society's most vulnerable, while generating significant savings on the budget. Reforms in the areas of health (paragraphs 14 and 15) and education will continue to improve quality and generate savings. In the budget envelope we allocated additional resources dedicated to investments in the first half of the year, to improve the absorption of EU funds. If the absorption improves enough, we will look for solutions to create a larger fiscal space for investments from mid-2011. At the same time, we will implement a reporting system for state enterprises (IS) that have recently been added (or will be added in 2011) to the ESA definition of the consolidated general budget. * 1) Once we start receiving the information in a timely manner, at the timing of the next assessment will require the amendment of the performance criterion on the total balance of the consolidated general budget to add the deficit of these entities. --------- * 1) Specifically, we will request monthly statements on income and cash payments and outstanding bills, as well as final quarterly tax situations, as in the case of the other entities that are part of the consolidated general budget, having the same Deadline for transmission. 9. For 2012 we aim to reduce the deficit to the level of 3% of GDP (both in terms of cash and in ESA terms of commitment). This will entail compliance with the Tax Responsibility Act and further restricting spending, including spending on wages. We will strictly limit the ad hoc changes to the tax system, to ensure predictability and stability. We started developing the medium-term fiscal strategy for 2012-2014, an important step in implementing the Tax Responsibility Act, and we will use this process to improve budget planning and strengthen our commitment to the Maastricht targets. We will strengthen the recently established Fiscal Council, allowing full employment of the posts provided with persons who have the appropriate training. 10. We will carry out an inventory of unpaid arrears and invoices at the end of December 2010 at the level of the entire consolidated general budget and of IS (structural reference criterion for the end of April 2011 * 2). This exercise will provide reporting by these entities to the Ministry of Public Finance (MFP) of details of all arrears and unpaid bills at the end of 2010 * 3), and will subsequently no longer be approved the payment of any unregistered invoices in this exercise. By the end of April 2011 we will also develop an action plan that includes an improved mechanism for control of commitments and enforcement measures to eliminate existing arrears and prevent the accumulation of new arrears, both at the the level of the consolidated general budget and the level of IS. In the next 2 years, the period of payment of invoices from the time of their surrender will be reduced. A European directive to appear in this regard will be transposed in due time in Romanian legislation. At the central level, recently we have substantially reduced arrears to close to zero, according to previously agreed (performance criterion). The new legal regulations on local public finances, which have come into force since January 1, 2011, will allow better control over arrears at the level of local authorities, for them establishing an indicative target. The first stage in the integration of the accounting reporting system with the Treasury payment system is anticipated to be completed in the coming weeks (structural benchmark, March 15, 2011). The next stage, the design of the system, including the control and reporting module of commitments for all levels of the administration, will be completed by the end of September 2011. --------- * 2) For IS at the level of local authorities, the inventory of arrears and unpaid invoices at the end of December will be completed by the end of June 2011. * 3) If necessary, the data will be verified with the help of external audit teams. 11. We have improved our financing strategy and will continue to focus on expanding maturities to our domestic debt, achieving the yield curve and strengthening financial buffers, directed by the recently developed strategy. debt management, which will be updated and published annually. We are launching a "medium-term euro securities" programme, which will keep our presence in the foreign markets in more flexible issuance procedures and help us to strike a balance between domestic and foreign markets. We are firmly committed to increasing financial buffers in order to reach a level that ensures the coverage of the 4-month funding needs during 2011 and to maintain them at that level. In order to develop our capacity, in 2011 we will conduct a formal analysis of our debt management strategy with the assistance of experts from the IMF, EC and WB. We will also improve Treasury's IT systems and employment with experienced staff. 12. We will continue our efforts to improve tax administration and combat tax evasion. The ordinance on individuals with large wealth was approved at the end of December, the structural reference criterion being fulfilled. An IMF expert has provided assistance in its subsequent implementation. We will equip with staff the recently created Physical Persons Analysis Service until the end of March and we will develop and implement a strategy on compliance risks, which will correspond to the best practices in the field, until the month august 2011. In other news, we will approve a Government decision on indirect verification methods (preliminary action) and we will develop an organizational strategy and implementation plan in order to incorporate these methods into functional functionalities. on compliance, until June 2011. As agreed with the IMF and the EC, we will establish a simplified system for taxing small taxpayers under the cap, with assistance from the IMF and the EC, while calling on the EU Council of Ministers to amend the cap from the EU. which registration as a VAT payer becomes mandatory at EUR 50,000 (structural benchmark for the end of June 2011). We have unified several tax returns on social contributions since this year. We are considering further simplification of tax returns and the number of compulsory payments in order to secure a one-stop shop for tax payments and an extension of the electronic declaration. We will continue our efforts to introduce computer systems and strengthen the information technology department of the National Agency for Fiscal Administration (ANAF) to improve tax administration. We have also started to develop the restructuring plan of ANAF and we will submit to the Parliament a draft of this plan by the end of the month [April 2011]. We will provide a central point of examination and transmission of potential cases of fraud and we will develop the tax fraud identification instructions. 13. The accelerated absorption of EU funds continues to be a central objective of the Government. In the coming year we will focus on developing the administrative capacity of the units managing funds, modernising and strengthening the regulatory and regulatory framework in the field of public investment and other relevant areas for Absorption of EU funds and prioritisation of investments to provide sufficient funds for key projects. The government will pass the coordination unit of EU structural instruments from the Ministry of Public Finance under the Prime Minister and will strengthen its authority and staff. We will conduct a comprehensive analysis of the existing portfolio of investments (comprising EU and EU funding projects), on the basis of which we will prioritize and evaluate the existing portfolio of projects, to focus on those whose funding can be fully secured in an average time horizon (e.g. 3-5 years), we will examine the viability of old projects, low priority projects and non-performing ones being interrupted, and we will produce a database by the month June, final report and action plan by the end of September 2011 (benchmark structural). We will create facilities for the reallocation of the capital budget during the year to those ministries that have the best results in terms of absorption of EU funds and that record the highest degree of efficiency in the implementation projects. 14. The government will continue the restructuring of the health sector to ensure the functioning of high quality standards, from now on, of the healthcare system, within the limits of budget allocations. We have reduced the arrears in the health sector by the end of December 2010 and we continue to implement the measures in line with the commitments we have previously made. In order to achieve a proper balance between the need to maintain adequate medical services and to control costs, we have submitted to Parliament the legislation establishing the co-payment system; we have limited the number of hospital admissions contracted by 10% compared to 2010 levels; we reduced the price addition paid by the Government for medicines in national programs (C2 list); we reduced the share of medical services settlements provided by doctors according to the number of patients from 70% to 50%. We implement a transparent and integrated IT system in the health sector to monitor and streamline health spending, with which a significant number of doubtful requests have already been identified. We also asked the Court of Auditors to audit the registration of patients in the primary care system. 15. The following previously agreed health measures are currently being prepared: (i) clarification of the legislative framework relating to the clawback tax applicable to distributors of medicinal products; (ii) restructuring of the hospital system; (iii) the abolition of the obligation to conclude contracts with all hospitals, thus allowing contracting on a competitive basis with selected hospitals, while ensuring transparency and supervision; (iv) the establishment of indicative ceilings for quarterly services contracted with hospitals and doctors and the creation of incentives for doctors who comply with the indicative ceilings; and (v) reforming, with assistance from the WB, the package of medical services provided by the Government, in order to exclude the coverage of expensive non-essential medical services. We will also review and review with assistance from the WB, the formula for the National Health Insurance House, by introducing a system in which "money follows the patient." We will review the list of compensated and free medicines approved by Government Decision no. 720/2008 for the approval of the List of international common names corresponding to medicinal products covered by insurance, with or without personal contribution, on the basis of a prescription, in the health insurance system, with subsequent amendments and completions, in order to amend it and to switch to generic medicines where possible. For 2012 pharmaceutical costs for the most expensive drugs will also be controlled by applying strict drug use protocols and through a novel module of electronic prescriptions for the National Information System. unique integrated health, in compliance with strict procedures. We will review the budgets of hospitals and start implementing the hospital rationalization strategy, in order to reduce the number of hospital beds funded (currently 135,200) to the European average per capita by 2013, adapting at the same time properly the number of acuti beds. To achieve this goal, by the end of June 2011 we will reduce the number of beds to 133,000 and by the end of December 2011 to 129,500. Financial sector 16. The growth of bad loans slowed significantly in the last quarter of 2010, reaching 11.9% of the total loans of the banking sector. As the economic recovery gains land and loan loss provisions stabilise in the first half of 2011, the banking sector as a whole is anticipated to return to profitability. Banks remain well capitalized, at 14.7%, with all banks having a solvency ratio of more than 11% at the end of 2010. The parent banks of the largest foreign banks maintained aggregate exposures under the European Banking Coordination Initiative of 98% at the end of January 2011, well above the new target of 95% of the exposure at the end of March 2009. We intend to continue discussions with a view to extending the agreement on the European Banking Coordination Initiative, aiming to gradually reduce banks ' commitments in terms of exposure as conditions on the international markets are improving. 17. We will carefully monitor developments in the banking sector and continue to strengthen financial security devices. The NBR, together with the FGD, will develop procedures to empower new restructuring authorities and develop contingency plans. We will also ensure that FGD has direct access to liquidity to cover any potential funding shortfall and that joint procedures, agreed with the MFP, are developed to access funds in case of necessity, to maintain confidence. depositors and financial stability. The authorities will take the necessary measures to ensure that the consolidation process in the banking sector generates strong and well capitalized institutions, with a shareholder base that can support them. The authorities will review the legislation on FGD, the banking system and the legislation on the liquidation of credit institutions, to ensure the consistency between these normative acts. In order to ensure more efficient access of banking institutions to NBR liquidity, the NBR will widen the palette of assets that can be accepted as collateral for its refinancing operations, by including bonds issued on the plan local financial institutions listed on the Bucharest Stock Exchange, as well as the Eurobonds issued by the Romanian Government. 18. The NBR will develop and submit for consultation by the end of June 2011 proposals on prudential filters designed to ensure the solvency, provisions and prudential banking reserves and allow the timely introduction of International Financial Reporting (SIRF) at the beginning of 2012. Authorities will ensure that the prudential treatment of "debt against shares" swaps does not result in a weakening of banks ' financial position * 4) and will require banks to institute capital valuation methodologies at the most. reduced value applicable in accordance with the accounting classification. We will monitor developments in foreign currency loans and take stock, if necessary, to ensure that foreign currency loans have a fair price that reflects the risk of loans in uninsured currency (a-hedged). ) We will continue to consult with IMF and EC experts before the introduction or amendment of other aspects of the regulatory framework and work to avoid the adoption of legislative initiatives such as the current draft law. personal insolvency or proposals on the debt collection law, which could undermine the discipline of debtors. The enforcers that the banks currently have will have the opportunity to be admitted into the liberal profession of public bailiffs without any formal restrictions or admission barriers, such as professional authorization. and/or admission exams or admission fees or any kind, thus being able to become members of this professional body with full professional guarantees, rights and obligations. --------- * 4) The prudential treatment of "claims against shares" swaps should ensure that: ((i) the involvement of credit institutions in such operations shall be carried out on the basis of a prudent decision-making process; ((ii) the value of the shares is fully deducted from the own funds of credit institutions in order to avoid any artificial improvement of prudential indicators; and ((iii) the proceeds of the provision of loan losses determined by such operations shall not be taxed. Monetary and foreign exchange policy 19. The NBR is still firmly determined to reduce inflation to values within the official targeting range of 3 percent ± 1 percentage point in 2011 and 2012. As with the current programme, progress towards these objectives will be monitored by using an inflation consultation clause (see Technical Memorandum of Understanding-MTI). The effects of the VAT rate hike last July on inflation were largely anticipated. However, inflation in recent months has been driven further by the pressures of food and fuel prices. After reaching a maximum of about 8%, we expect inflation to gradually return to the range targeted by the NBR in the second part of 2011. While existing weaknesses in the economy are likely to fuel inflation, the risks are rather on the upward side as food and energy prices could rise more than expected and reforms to be produced will increase. to IS could impose the increase in the prices administered The easing of monetary policy could be resumed in 2011, provided that the major risks do not materialise and inflation remains close to the anticipated path. 20. Under the programme we anticipate an increase in gross international reserves in 2011 (mostly reflecting multilateral drawdowns) and in 2012. They will ensure greater confidence in the economy and allow better coverage of short-term foreign obligations. An AEN performance criterion will be set to coincide with this accumulation of gross reserves. The losses of reserves exceeding 2 billion euros over a period of 30 days during the program will attract consultation with IMF experts. 21. During the ASB period we will not introduce and intensify, without the approval of the IMF, the restrictions on making payments and transfers for international transactions, nor will we modify or introduce multicurrency practices and conclude no bilateral payments agreement that does not correspond to art. VIII of the IMF Statute. We will also not introduce or intensify import restrictions for balance of payments reasons. Structural reforms to increase growth and flexibility State enterprises 22. We are firmly determined to carry out deep IS reforms, especially those in key sectors for generating growth, such as the energy sector and the transport sector. In recent years, many IS have become a substantial increasing tax burden. In addition to applying for subsidies to cover their considerable losses, they have accumulated arrears of more than 4% of GDP. The quality of services in many sectors is required to be substantially improved and presses on growth by obstructing the future development of the private sector. 23. Implementing a comprehensive strategy aimed at the viability of IS and reforming their governance will be vital. We will develop strategic action plans * 5) for the main companies (referred to in paragraph 20 of the MTI, structural benchmark) by the end of April 2011 and for all other companies by the end of July 2011, plans which: ---------- * 5) Strategic action plans will be assessed by the WB. ((i) provide up-to-date information on the financial viability of each IS with the majority participation of the State and of each autonomous rule (autonomous institutions-IA); ((ii) classify these institutions into institutions to be liquidated, privatized or retained (to be restructured if applicable); (iii) will present the actions to be carried out in the direction of closing, ensuring viability or privatization; and (iv) will present concrete plans to substantially reduce arrears (through redemptions, transformation into securities, swaps, etc. )). We will implement a system through which IS and IA will report to MFP monthly the main financial and economic indicators. We will also fine Government Emergency Ordinance no. 79/2008 on economic and financial measures at the level of some economic operators, approved with amendments and completions by Law no. 203/2009 , with subsequent amendments and completions, in the sense of imposing IA and companies subordinated to local authorities the obligation to transmit quarterly operational and financial indicators to the main MFP. For the main privatizations (paragraphs 25, 26) * 6), by the end of August 2011 the transaction consultant will be appointed an internationally renowned company, until the end of 2011 the proposals will be submitted and by mid-2012 the will organize the auctions. In order to resolve the governance issues of IS we will develop (in consultation with the WB) and approve the legislation improving the governance of these companies, it will introduce the obligation of periodic independent external audits to these companies and will transfer financial control to IS from the relevant ministries to the MFP until the end of September 2011. ---------- * 6) In addition to those listed below, we will start the analyses in order to privatize the stake that the state still holds at the Commercial Company "Oltchim"-S.A. 24. Ensuring efficient energy supply is critical for sustainable growth. The energy sector is currently suffering from a small volume of investment due to the economic downturn, domination of undercapitalized state firms and possibilities for efficiency and the fact that regulated prices and tariffs have not been fully adjusted (due to concerns about the effects this might have on consumers). To resolve the price and regulatory deficiencies: (i) we will take the necessary actions to restore the financial and operational autonomy of the Energy Regulatory Agency (ANRE), in accordance with EU legislation (third energy package); (ii) we will present a plan to eliminate regulated electricity and gas prices by September 2011; (iii) we will define, by the end of 2011, vulnerable consumers, in line with European legislation, and we will create mechanisms for their protection (in cooperation with the MFP and the Ministry of Labour, Family and Social Protection); (iv) we will totally eliminate, in accordance with European directives, the regulated electricity and gas prices for non-financial users by the end of 2013 * 7) and we will complete the process by the end of 2015; and ---------- * 7) By 1 April 2011, an adjustment schedule will be established to reach the full price formula based on the unit cost of gas (CUG) by the end of 2011 for non-financial consumers. (v) we will ensure that the new bilateral contracts signed by the state producers of electricity and natural gas will be concluded in a transparent and non-discriminatory manner by "OPCOM"-S.A. (electricity) and other competitive (gas) procedure and that prices in existing contracts will be adjusted to market prices as soon as the law allows. 25. Both the capital needs and managerial know-how will be attracted in the energy sector through minority private investors (through IPO public offers or by selling shares to strategic partners) at the following companies, with the approval of the Government: ((i) Petrom (sale of a 10% package is ongoing); ((ii) Transelectrica (15% package by the end of 2011); ((iii) Transgaz (15% package by the end of 2011); and ((iv) Romgaz (15% package, until the spring of 2012). If our strategy of establishing 2 national energy champions succeeds, we will introduce appropriate mechanisms to ensure that there is no cross-subsidisation, combined with the recommendations of the Competition Council. If our strategy of setting up 2 national energy champions fails by the end of 2011, we will seek an alternative solution, including by privatizing majority packages to some companies in the energy field. In the meantime, to bring investment into the sector, we will continue to prepare the sale of minority or strategic packages to individual companies planned to be included in the national champions (which could subsequently be converted into shares in the firms 8) ANAF will use uninterrupted procedures for the collection of arrears from the National Company of Huilei (CNH), which will ultimately lead to the sale of viable assets, possibly through the application of insolvency proceedings. The other mining assets will be liquidated in accordance with EU regulations. At the Commercial Power and Thermal Power Production Company "Termoelectrica"-S.A., the viable units will be separated and the rest of the operations will be closed. ---------- * 8) Among the companies planned to be included in the national champions for which strategic investments will be tried are the energy complexes in Craiova, Turceni and Rovinari. 26. The growth of the private sector is acutely limited by inadequate transport infrastructure. Solving this weakness will reduce production costs, improve export possibilities and make Romania a more attractive destination for investments. The full implementation of the investment plans of the Ministry of Transport and Infrastructure (MTI) (especially those with European co-financing) will be essential (paragraph 13). Under EU rules, public transport companies must also be privatised or restructured to ensure better services. Actions will include the following: Roads ● National Company of Highways and National Roads in Romania-S.A. (CNADNR) will increase its revenues in 2011, in parallel with the elimination or renegotiation of non-performing contracts. ● MTI will try to balance the ratio between road and rail transport by reducing road transport. Railways ● We will extend the policy of introducing cost standards in the rail system, especially for procurement in the area of rail infrastructure and for repairs to rolling stock. We will develop multiannual plans for public procurement and investments in the National Railway Transport Society "C.F.R.-Calatori"-S.A. (C.F.R. Calatori) and the National Railway Transport Society "C.F.R.-Marfa"-S.A. (C.F.R. Commodity), in accordance with transport and necessity programs and in accordance with market developments. At CFR Infrastructure, C.F.R. Calatori and C.F.R. Merchandise we will continue to use fully-amortized assets. The restructured staff will be supported by offering reintegration and training services. ● Freight-By the end of 2011 a minority stake in the C.F.R. will be offered. Commodity to attract a strategic investor, with a view to full privatisation when market conditions allow it. ● Passenger transport-The efficiency of passenger rail services will be increased by restructuring the C.F.R. Travellers, including through the modification of passenger service contracts, a better recovery of costs (including the possibility of higher tariffs), and significant reductions in its scope of services. A strategic plan will target a 15% reduction in losses and the non-accumulation of new arrears in 2011. ● Infrastructure-Reducing services will significantly improve CFR Infrastructure's financial outlook. By the end of August 2011 we will close 1,000 kilometres of railway lines and develop competitive bidding plans for public service obligations and infrastructure maintenance on lines for an additional 20% of the system or we will close these lines. A strategic plan will target 25% reductions in losses and the non-accumulation of new arrears in 2011. Metropolitan transport ● We will approve the legislation establishing a new metropolitan transit authority that will manage the Commercial Transport Company with the Bucharest Metro "Metrorex"-S.A. (Metrorex) and the surface transport system in Bucharest-Bucharest Autonomous Transport Regia (RATB). The law will also allow for higher tariff adjustments (over indexation with inflation) in line with the strategic plan to cover current expenditure on income and capital expenditure through subsidies. At the same time, Metrorex will reduce its maintenance costs by 30% by the end of 2011. Air transport ● At the Commercial Company "Romanian National Air Transport Company TAROM"-S.A. (TAROM), by the end of April 2011 we will complete the analysis in order to identify a strategic investor. Labour markets 27. We bring important legislative changes to make the labor market more flexible, increase the efficiency of the collective bargaining process (while protecting the rights of employees and employers) and increase labor participation. We have completed a bill amending the Labor Code and working on the Social Dialogue Code, which will strengthen the law on unions, the law on settlement of labor disputes, the law on employers, the law on the collective agreement and the one on the Economic and Social Council. It is anticipated that both the amended Labour Code and the Social Dialogue Code will be approved by Parliament in the coming months. At the same time, we will ask the International Labour Organization to carry out an analysis of labor inspections, to improve the application of the law and to solve the problem of the black labor market in Romania. Improving the efficiency of social protection will remain a priority, especially in the field of social inspection. Business climate 28. Designed to improve the business climate, structural reforms in this program promote economic growth. Infrastructure investment and efficiency will be driven both by greater absorption of EU structural funds (paragraph 13) and by the restructuring, closure or privatisation of IS, especially in the energy and transport sectors. (paragraphs 22-26). More generally, actions to reduce compliance costs with tax law (paragraph 12) and improve governance, as well as reforms in public procurement and contracting will reduce bureaucratic costs and obstacles. for private sector. We will also undertake reforms in the agricultural sector-including by accelerating the mapping and registration of agricultural land-in order to improve food safety and increase export prospects. We will work with the EU to meet the concerns of the new public-private partnership law. Programme monitoring 29. The program will be monitored by quantitative performance criteria and indicative targets, through structural performance criteria and consultation clauses, during quarterly evaluation missions. Table 3 provides the concrete quarterly targets that will be monitored under the ASB for the total balance of the consolidated general budget, the guarantees from the consolidated general budget, the variation of the state budget arrears and the social security, CPI inflation and external assets. At the same time, indicative targets will be set for the current primary expenditure of the consolidated general budget, operational balances and IS arrears. We also agreed with the IMF team a prior action and the structural benchmarks that are presented in Table 4. The first evaluation will be completed by the end of June 2011 and the second one by the end of September 2011. Protecting financial resources 30. The NBR has made progress on the recommendations contained in the IMF's assessment in the framework of the policy on protecting its financial resources carried out in the context of the ASB approval in May 2009. In order to assess these progress, we will authorise the external auditor of the NBR to provide the IMF team with all necessary information and to discuss directly with the team members any aspect that is relevant to this process. We are also committed to receiving a mission with the object of assessment in terms of the policy on the protection of resources and to put without delay at the disposal of this mission all the necessary information requested. This evaluation will be completed by the date of the first ASB analysis mission at the end of June 2011. Gheorghe Ialomitianu, public finance minister Mugur Constantin Isarescu, Governor of the National Bank Table 1. Romania: Quantitative targets under the programme *Font 7 * 2008 2008 2009 2010 2011 ------------------------------------------------------------------------------------------------ Dec. March of June Sep. Dec. March of June Sep. Dec. March ---------------------------- real-real-real-real-real-real-real-real-real-pro-real-pro-real-indi- zat zat zat zat zat zat zat zat ------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------ I. Quantitative performance criteria | 1. The cumulative variation of assets | net external | (million euros) * 1), * 2) 25.532 -3.5 -5.119 -4.566 -4.874 779 -509 -318 -2,000 -750 -2,000 -1.145 350 | 2. The cumulative balance of the budget | general consolidated | (million lei) * 3), * 4), * 5) -24.655 -8.3 -14.456 -25.563 -36.101 -8.422 -18.015 23.732 -34.054 -33.621 ... ... -6.300 | 3. The cumulative stock of arrears | the consolidated general budget of | end of the previous year | (billion lei) 1.06 1.41 1.55 1.4 1.50 1.76 1.8 1.57 0.48 1.13 ... ... 0 | 4. Budget guarantees ceiling | Consolidated General issued in | Year (value | nominal, in billion lei) ... ... 0,02 0,8 2,2 4,6 5,5 6,5 12,0 7,6 ... ... 12,0 | | II. Permanent performance criteria | 5. Unaccumulation of arrears on duty | external 0 0 0 0 0 0 0 0 0 0 0 | | III. Consultations on inflation | 6. Inflation rate at 12 months in | consumer prices | Outer range (limit | superior) ... ... 8,4 7,7 6,5 6,5 ... 10,0 ... ... ... 9,0 | Indoor range (limit | superior) ... ... 7,4 6.7 5,5 5,5 ... 9,0 ... ... 8,0 | Central point 6.3 6.7 5.9 4.8 4.7 4.2 4.4 7.8 ... ... ... 7.0 | Indoor range (limit | lower) ... ... 5.4 4.7 3,5 3,5 ... 7,0 ... ... ... 6,0 | Outer range (limit | lower) ... ... 4.4 3.7 2,5 2,5 ... 6,0 ... ... ... 5,0 | | IV. Indicative targets | 7. Current primary expenses of | consolidated general budget | (excluding EU funds and | social assistance, | million lei) 92.327 22.149 43.238 63.878 85.637 32.749 66.124 98.721 131.5 131.938 ... ... 32,000 | 8. Operational balance (revenue | no taxes and interest), | excluding subsidies, for | the 10 IS defined in MTI -1.081 -2.333 -3.801 -4,000 -5.542 ... ... -750 | | Article from Memorandum | Projected cumulative revenues of | consolidated general budget without | EU funds (million lei) 151.508 36.355 74.669 116.091 157.950 159.141 ... ... 40.100 | ------------------------------------------------------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------------------------------------------------------ --------- * * 1) The figure for December 2008 is the stock * 2) The performance criterion for January 2011 and the indicative target for March 2011 are the target for December 2010 * 3) cumulative figures during the year (e.g. the figure in March 2011 is cumulative as of 1 January 2011). * 4) According to MTI, the targets for the end of September and the end of December were adjusted against the initial target of -28,200 and -34,650 with half of the revenues achieved above the anticipated level. * 5) The target for March 2011 may be adjusted by higher or lower capital expenditures as specified in the MTI. Table 2. Romania: Performance criteria for the seventh evaluation *Font 7 * ┌ ------------------------------------------------------------------------------------------ [...] | Measure | Data targeted | Comment | ├ ------------------------------------------------------------------------------------------ [...] | Quantitative performance criteria | | | | | | 1. Total balance of the consolidated general budget | December 31, 2010 | Fulfilled | | | Two. The ceiling of guarantees of the consolidated general budget | December 31, 2010 | | | 3. Ceiling of internal arrears of the consolidated general budget | 31 December 2010 | Unfulfilled | | | Four. Non-accumulation of external arrears on payment | December 31, 2010 | Fulfilled | | | Five. Net external active ceiling | December 31, 2010 | Fulfilled | | | | | | | | Indicative Quantitative Target | | | | | | 1. Current primary expenditure of the consolidated general budget | 31 December 2010 | Unfulfilled | | | Two. The indicative target of the IS operating balance with the highest losses | December 31, 2010 | Unfulfilled | | | 3. Net external active ceiling | March 31, 2011 | Large probability | | | | | | | fulfillment | | | | | | | | Interval of consultation on inflation | | | | | Interval inside | December 31, 2010 | Fulfilled | | External Range | December 31, 2010 | Fulfilled | | | | | | | | Structural Benchmarks | | | | | | | 1. Parliament's ratification of amendments to the closing framework | | | | | of the banks | 1 December 2010 | Partial fulfilled | | | Two. Reform of the tax administration methodology of individuals with | | | | | Great fortunes | December 31, 2010 | Fulfilled | | | 3. First phase of accounting reporting system integration with the system | | | | | | Treasury Payments | March 15, 2011 | Fulfilled | | | Four. Amending legislation in the sense of allowing the use of resources | | | | deposit guarantee fund to facilitate restructuring | | | | | | | | banks, including procurement and assumption transactions | March 15, 2011 | Large probability | | | | | by default, | | | | | | reprogrammed for | | | | July 31, 2011 | └ ------------------------------------------------------------------------------------------ [...] Table 3. Romania: Quantitative targets under the New Program *Font 9 * 2010 2010 2011 ------------------------------------- Dec. March of June Sep. Dec. are-program program indi-indi- Cativ cative mat ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ I. Quantitative performance criteria | 1. The cumulative variation of assets | net external | ((million euro) * 1), * 2) 19.908 250 250 500 500 | 2. The cumulative balance of the budget | general consolidated | ((million lei) * 3), * 4) -33.621 -6.300 -12.600 -17.150 -23.953 | 3. Stock of budget arrears | state and system | social security (billion lei) 0,19 0,20 0,20 0,15 0,10 | 4. Budget guarantees ceiling | consolidated general issued from | End of 2008 (value | nominal, in billion lei) 12,0 14,0 14,0 14,0 14,0 | | II. Permanent performance criteria | 5. Unaccumulation of arrears on duty | external 0 0 0 0 | | III. Consultations on inflation | 6. Inflation rate at 12 months in | consumer prices | Outer range (limit | superior) ... 9,0 8,8 6.2 5.7 | Indoor range (limit | superior) ... 8,0 7,8 5,2 4.7 | Central point 8.0 7.0 6.8 4.2 3.7 | Indoor range (limit | lower) ... 6,0 5.8 3,2 2,7 | Outer range (limit | lower) ... 5,0 4,8 2,2 1,7 | | IV. Indicative targets | 7. Current primary expenses of | consolidated general budget | (excluding EU funds and | social assistance, million lei) 3/ 131.938 32,000 64,000 95,600 128,550 | 8. Operational balance (revenue | no taxes and interest), | excluding subsidies, for | Main IS (defined in MTI) | (billion lei) -6.5 -1.7 -2.7 -3.6 -4 | 9. The arrears stock of the main IS | ((defined in MTI) (billion lei) 18,8 19,5 19,5 19 18 | 10. The stock of arrears of budgets | local (billion lei) 0,91 0,95 0,90 0,85 0,80 | | Article from Memorandum | Consolidated general budget revenues, | without EU funds (million lei) 3/ 159,141 40.100 82,250 127,000 171,575 | ------------------------------------------------------------------------------------------ ------------------------------------------------------------------------------------------ --------- * * 1) The figure for December 2010 is the stock. * 2) cumulative flows from the stock at December 2010 * 3) cumulative figures during the year (e.g. the figure in March 2011 is cumulative as of 1 January 2011). * 4) The target for March 2011 may be adjusted by higher or lower capital expenditures as specified in the MTI. Table 4. Romania: Conditionalities under the new programme *Font 7 * ┌ -------------------------------------------------------------------------- ---------------------------------- | Measure | Data targeted | Comment | ├ -------------------------------------------------------------------------- ---------------------------------- | Prior action | | | | | Approval of Government decision on indirect methods of control | | | | | (paragraph 12) | | | | | | | | | | | Quantitative performance criteria | | | | | | 1. Total balance of consolidated general budget | Quarterly | | | | | Two. Ceiling of consolidated general budget guarantees | Quarterly | | | | | | 3. Ceiling of the internal arrears of the state budget and the system | | | | | Social Security | Quarterly | | | | | Four. Non-accumulation of external arrears on payment | Continuu | | | | | Five. Net external active ceiling | Quarterly | | | | | | | | | | Indicative quantitative targets | | | | | | 1. The current primary expenditure ceiling of the consolidated general budget | Quarterly | | | | Two. The domestic arrears ceiling of local authorities | Quarterly | | | | | 3. Ceiling of operational balance and arrears of state-owned enterprises | | | | | main loss-making | Quarterly | | | | | | | | | | | Interval of consultation on inflation | | | | | Interval inside | Quarterly | | | | External Range | Quarterly | | | | | | | | | | Structural Benchmarks | | | | | | | 1. Completion of inventory of arrears and unpaid bills at the end | | | | | 's December 2010 for all consolidated general budget and IS | | | | | | | | (paragraph 10). | | 30 April 2011 | | | | Two. Development of strategic action plans for the main IS | | | | | | (paragraph 23). | | 30 April 2011 | | | | 3. Introducing a simplified charging system for taxpayers | | | | | Smaller | below the registration ceiling, with the help of the IMF and the EC, in | | | | | | parallel to the request of the increase to 50,000 euros of the ceiling from which | | | | makes registration mandatory as VAT payer from the Council | | | | | EU Ministers (paragraph 12). | | 30 June 2011 | | | | Four. Removal by Government ordinance of the legal basis for the funds | | | | incentives, with entry into force on 1 January 2012 (paragraph 8). | | 30 June 2011 | | | | Five. Amending legislation in the sense of allowing the use of resources | | | | deposit guarantee fund to facilitate restructuring | | | | | | | to banks, including procurement and assumption transactions (paragraph 17). | | July 31, 2011 | | | | Six. Carrying out a comprehensive analysis of the investment portfolio | | | | Existing | | | | | | | | | | | | | | | | existing projects, in order to focus on those projects whose | | | | | | funding can be fully secured, examining project viability | | | | | | | old, of those with low priority and those unviable, in view | | | | | | | | | | their disruption, and the production of a final report and a plan | | | | Action (paragraph 13). | | September 30, 2011 | | └ -------------------------------------------------------------------------- ---------------------------------- + MEMORANDUM OF UNDERSTANDING ROMANIA: TECHNICAL MEMORANDUM OF UNDERSTANDING 10 10 March 2011 1. This Technical Memorandum of Understanding (MTI) defines the variables included in the quantitative performance criteria and the indicative targets specified in the Letter of Intent (SI), the main prerequisites, the methods to be used for assessing the performance of the programme and reporting obligations in order to ensure adequate monitoring of economic and financial developments. The quantitative performance criteria and indicative targets as well as the structural performance criteria for 2011 are presented in Tables 3 and 4 respectively. 2. In the acceptance of the program the exchange rates of the Romanian leu (RON) against the euro are set at 4,2848 RON = 1 EURO, against the US dollar at 3,2045 RON = 1 $, compared to the Japanese yen at 3,9400 RON = 1 'a5 and against the pound at 4,9673 RON = 1' a3, the rates being those posted on the website of the National Bank of Romania (NBR) on December 31, 2010. Exchange rates against other currencies, where applicable, will also be those posted on the NBR website on December 31, 2010. 3. In the program's acceptance, the consolidated general budget includes the entities defined in the 2011 budget. These are: the central government (state budget, treasury, self-funded state entities included in the budget, etc.), local authorities, social insurance funds (pensions, health and unemployment), National Highway and National Roads Company. from Romania and the Property Fund administration. This definition of the consolidated general budget also includes any new funds or special budgetary and extra-budgetary programmes that could be created during the programme period to carry out tax operations, as is defined in the IMF Manual for Government Financial Statistics 2001. The authorities will immediately inform the experts of the International Monetary Fund (IMF) of the creation of any such new fund or program. As stated in SI (paragraph 8), this definition will be extended on the occasion of the first assessment under the ASB to include the SOEs included in the consolidated general budget within the ESA. Quantitative performance criteria, indicative targets, Inflation consultation tape and performance criteria permanent A. Limit on the variation of net foreign assets 4. In the program's acceptance, net foreign assets (AEN) are defined as NBR's AEN minus treasury obligations to the IMF. 5. AEN of the NBR are defined as the euro value of the gross foreign assets of the NBR (including the mandatory reserves of the commercial banking system held at the NBR) minus the gross external liabilities of the NBR and will be measured on the basis of the operational definitions of NBR and not those accounting. Non-euro denominated foreign assets and liabilities will be converted into euro at the exchange rates of the programme. 6. Gross foreign assets of the NBR are defined as including the DST holdings of the NBR, the position of the country's reserves at the IMF, the holdings of cash, securities and deposits abroad in convertible foreign currencies. Excluded from the reserve: ((i) gold and other precious metals; (ii) assets in non-convertible currencies; ((iii) non-liquid assets; ((iv) any assets that are engaged, collateralised or under another obligation, if they are not associated with them and a gross external liability; (v) claims on residents; and ((vi) foreign currency receivables deriving from derivatives in foreign currencies opposite the national currency (such as futures, forwards, swaps and options). 7. The gross foreign liabilities of the NBR shall be defined as all liabilities in foreign currencies to residents and non-residents, including commitments to sell foreign currencies arising from derivatives (such as futures, forwards, swaps and options), and all credit default from the IMF, but excluding: ((i) deposits of foreign currencies of banks linked to required reserves; and (ii) deposits in foreign currencies of the Government at the NBR. This definition aims to bring the concept of external liabilities closer to the definition of balance of payments, on which targets are based. Limit for the cumulative variation of the AEN from the beginning of the year (in mil. euro) * 1) *Font 9 * ┌ ----------------------- | | | | ┌ | | | 2010 | 2011 | | | ] [] [] [] [] | | December | CP March | CP June | September | December | | | (stock) | | | (indicative) | (indicative) | ├ ----------------------- 留言 | 加入好友 ----- 留言 | 加入好友 ----- | The cumulative variation of AEN | 20.026 | 250 | 250 | 500 | 500 | | Position in Memorandum: | | | | | | | | | Gross external assets | 32.432 | 1000 | 1000 | 1000 | 1000 | └ ----------------------- ️ ----------- ️ --- ️ ️ --- -------- * 1) CP = performance criterion; data at the end of the month. Flows in 2011 are cumulative since the beginning of the calendar year (for example, the March 2011 figure is cumulative as of January 2011). The 2011 stocks are obtained by adding the 2011 stocks to the final stock of 2010. 8. The AEN targets will be adjusted upwards (down) with the surplus (deficit) from the draws within the program related to the base projection. The draws in the program are defined as external draws from official creditors (World Bank and European Commission) that are usable to finance the total state budget. The AEN targets will also be adjusted upwards with the increase of the mandatory reserves of commercial banks held at the NBR compared to the end of December 2010 (6.797 million euros), measured at the exchange rates of the program. External draws from the program-Basic projections (in mil. euro) ┌ ---------------------------------------------------------------------------- | | 2011 | ├ ------------------------ [...] [...] [...] [...] [...] | | March | June | September | December | | ------ | Cumulative flows from | 1,500 | 1.650 | 2.050 | 2.050 | | | | | | | | | | | └ ------------------------ [...] [...] [...] [...] [...] B. Consultation mechanism for inflation rate at 12 months 9. Quarterly consultation interests for the 12-month inflation rate in consumer prices [as measured by the Consumer Price Index (CPI) published by the National Institute of Statistics] are specified below. If the year-on-year CPI inflation rate is outside the outer ranges specified below, the authorities will conduct a consultation with the IMF on the proposed policies in response before calling for further draws under the programme. In addition, the NBR will have discussions with IMF experts if the CPI year-on-year inflation rate is outside the inner ranges specified for the end of each quarter in the table below. *Font 9 * ┌ -------------------------------- [...] [...] | | | 2010 | 2011 | | | [] [] [] [] | | December | March | June | September | December | | | (realized) | (target) | (target) | (indicative) | (indicative) | ├ -------------------------------- [...] [...] [...] [...] [...] | External interval (limit | | | | | | | | | superior) | | 9.0 | 8.8 | 6.2 | 5.7 | ├ -------------------------------- [...] [...] [...] [...] | Inside interval (limit | | | | | | | | | | superior) | | 8.0 | 7.8 | 5.2 | 4.7 | ├ -------------------------------- [...] [...] [...] [...] | Effective/Central point | 8.0 | 7.0 | 6.8 | 4.2 | 3.7 | ├ -------------------------------- [...] [...] [...] [...] | External interval (limit | | | | | | | | | Lower | | 6.0 | 5.8 | 5.2 | 2.7 | ├ -------------------------------- [...] [...] [...] [...] | Inside interval (limit | | | | | | | | | Lower | | 5.0 | 4.8 | 4.2 | 1.7 | └ -------------------------------- [...] [...] [...] [...] [...] [...] C. Performance Criterion on the balance of the consolidated general budget 10. The budget deficit will be monitored quarterly by the cash balance of the consolidated general budget. The authorities will consult with IMF experts on corrective measures in case of slippages of government revenues and funding. Limit for consolidated general budget balance * 1) ┌ ------------------------------------------------------ ------------------------------------- | | (in millions of lei) | ├ ------------------------------------------------------ 留言 | 加入好友 | End of December 2010 (realized) | -33.621 | ├ ------------------------------------------------------ 留言 | 加入好友 | End of March 2011 (performance criterion) | -6.300 | ├ ------------------------------------------------------ 留言 | 加入好友 | End of June 2011 (performance criterion) | -12,600 | ├ ------------------------------------------------------ 留言 | 加入好友 | End of September 2011 (indicative) | -17.150 | ├ ------------------------------------------------------ 留言 | 加入好友 | End of December 2011 (indicative) | -23.953 | └ ------------------------------------------------------ ------------------------------------- --------- * 1) cumulated figures during the calendar year (for example, the March 2011 figure is cumulative as of January 2011). 11. The budget deficit will be measured above the line using the budget execution data. At the date of the first evaluation under the Stand-by Arrangement (ASB) the calculation of the 2011 budget deficit will be amended in accordance with the extended definition of the consolidated general budget, which will include the following state-owned enterprises (IS) (se anticipates that information will become available at the end of Q1 of 2011) * 2): National Company of Huilei S. A, National Company of Highways and National Roads of Romania-S.A., Property Fund, Commercial Transport Company with Metro Bucharest "Metrorex"-S.A., Autonomous Regia " Danube River Administration of Down "Galati, National Coal Society-S. A, National Railway Transport Society" C.F.R.-Calatori "-S.A., National Radio Communications Company Navale Radio Constanta, National Railway Transport Society Infrastructure, Commercial Power and Thermal Power Production Company "Termoelectrica"-S.A. Bucharest, Aquavalor-S.A., Arad Airport-S.A., Iasi Airport-S.A., Baia Mare International Airport-R.A., Stefan cel Mare Airport Suceava-R.A., Transilvania Airport-Targu Mures -R.A., Tulcea Airport, Aqua Calor-S.A., Electrica de Termoficare Brasov-S.A., Citadin-S.A. Hunedoara, Dalkia Romania-S.R.L., Edil Therma Hunedoara, Goscomloc-S.A., Household Oraseneasca S.A., Rominservices Therm-S.A., Society National "Mihail Kogalniceanu-Constanta International Airport"-S.A., T.S.P. Ecoterm-S.A., Thermal-S.A., Termloc-S.A., Thermal Plant Comanesti-S.A. ------- * 2) The IS list to be included in the definition of the consolidated general budget will be established by Eurostat at the end of March, when possible and revisions of IS already incorporated. 12. The Ministry of Public Finance (MFP) will also provide monthly data to measure the deficit below the line. The consolidated general budget balance measured below the line will include: + (i) net external financing, excluding revaluation gains and losses; + (ii) the change in net domestic credit in the financial system, excluding gains and losses from revaluation of deposits denominated in foreign currencies and including adjustments for: + (a) EU funds received and unspent yet (advance payments); + (b) requests for reimbursement of the Government from EU funds; + (c) obligations of the Unpaid Property Fund; + (iii) change in the stock of government securities issued, net of revaluation changes; + + (iv) net variations of other financing. 13. If the difference between the deficit of the consolidated general budget measured above the line and below the line is more than 200 million lei per quarter during 2011, the MFP will consult with the IMF experts. 14. If budget revenues excluding non-refundable funds will exceed the projected value under the program, the deficit target will be adjusted down by one half of the surplus to allow for additional capital expenditures, reducing at the same time deficit. The following table shows the budget revenues exclusively cumulated non-reimbursable funds projected for 2011, compared to which the realized revenues will be compared. ┌ ------------------------------------------------------ ------------------------------------- | | cumulative revenues projected in the general budget | (in millions of lei) | | consolidated, exclusive EU funds * 1) | | | ├ ------------------------------------------------------ 留言 | 加入好友 | End of December 2010 (realized) | 159.163 | ├ ------------------------------------------------------ 留言 | 加入好友 | End of March 2011 (projection) | 40.100 | ├ ------------------------------------------------------ 留言 | 加入好友 | End of June 2011 (projection) | 82.250 | ├ ------------------------------------------------------ 留言 | 加入好友 | End of September 2011 (projection) | 127,000 | ├ ------------------------------------------------------ 留言 | 加入好友 | End of December 2011 (projection) | 171.575 | └ ------------------------------------------------------ ------------------------------------- -------- * 1) cumulated figures during the calendar year (for example, the March 2011 figure is cumulative as of January 2011). 15. The performance criterion for the consolidated general budget balance for the first quarter of 2011 will be adjusted downward from -6,300 by the amount with which capital expenditures (including expenses related to EU funds) exceed 5,740 million lei, up to a limit of -8,000 million. Similarly, the target will be adjusted upwards by the amount with which capital expenditures do not reach 5.740 million lei in the first quarter of 2011. D. Performance criterion limiting the issuance of government guarantees to the non-financial private sector and public enterprises 16. The issuance of government guarantees to the non-financial private sector and to public enterprises will be limited during the duration of the program. The ceiling is set at 14 billion lei, but can be adjusted up by up to 9.6 billion lei for guarantees intended to finance the Nabucco project. In the course of future evaluation missions, revised targets will be renegotiated in order to allow reasonable public guarantees in the context of the privatisation of the majority of shares in state-owned enterprises and the securitisation of internal arrears. ┌ ------------------------------------------------------- ------------------------------------- | Cap for guarantees from the consolidated general budget | | | | newly issued from the end of 2008 to: | (in billions of lei) | ├ ------------------------------------------------------- ------------------------------------- | End of December 2010 (realized) | 7,6 | ├ ------------------------------------------------------- ------------------------------------- | End of March 2011 (performance criterion) | 14 | ├ ------------------------------------------------------- ------------------------------------- | End of June 2011 (performance criterion) | 14 | ├ ------------------------------------------------------- ------------------------------------- | End of September 2011 (indicative) | 14 | ├ ------------------------------------------------------- ------------------------------------- | End of December 2011 (indicative) | 14 | └ ------------------------------------------------------- ------------------------------------- E. Performance Criterion on the internal arrears stock of the state budget and social security system 17. The performance criterion established with regard to the stock of arrears at the level of the state budget and social funds (defined in paragraph 3 above) envisages their elimination during the program. The stock will be measured net of intergovernmental arrears, but the Government will report both gross arrears and net arrears. In case of necessity, the Government will take the corrective measures to prevent the accumulation of new arrears. In the program's acceptance, arrears means past payment amounts of maturity by 90 days (in accordance with the definition of ESA95 expenses). ┌ ------------------------------------------------------- ------------------------------------- | The stock of arrears at the level of the state budget and | | | | social funds | (in billions of lei) | ├ ------------------------------------------------------- ------------------------------------- | End of December 2010 (stock, realized) | 0,19 | ├ ------------------------------------------------------- ------------------------------------- | End of March 2011 (performance criterion) | 0,20 | ├ ------------------------------------------------------- ------------------------------------- | End of June 2011 (performance criterion) | 0,20 | ├ ------------------------------------------------------- ------------------------------------- | End of September 2011 (indicative) | 0.15 | ├ ------------------------------------------------------- ------------------------------------- | End of December 2011 (indicative) | 0,10 | └ ------------------------------------------------------- ------------------------------------- F. Permanent performance criteria regarding non-accumulation of external arrears at the level of the consolidated general budget 18. At the level of the consolidated general budget will not accumulate arrears on external payments during the program. In the acceptance of this performance criterion, an external payment courier will be defined as a payment of the consolidated general budget, which was not carried out within 7 days from the due date. The performance criterion will apply on a permanent basis. G. Indicative target on the primary current expenditure of the consolidated general budget 19. The indicative target on the primary current expenditure of the consolidated general budget is defined as including personnel expenses, expenditure on goods and services exclusively EU funds (specified in the category of external loans non-refundable), subsidies, transfers to public entities, pensions (social assistance category from the social security budget), state aid and other expenses in the category of other transfers, Reserve Fund and other classified expenses in the monthly reporting tables. The current expenditure target will be adjusted to reflect the additional expenses due to swap agreements between local authorities and public undertakings with the amount spent in the respective quarter. --------- * 2) The swap agreements involve the mutual cancellation of outstanding tax liabilities of public undertakings with arrears owed to those public undertakings by the State authorities (local government). ┌ ------------------------------------------------------- ------------------------------------- | Cumulative variation of current primary expenses of | | | | consolidated general budget * 1) | (in million lei) | ├ ------------------------------------------------------- ------------------------------------- | End of December 2010 (realized) | 131.938 | ├ ------------------------------------------------------- ------------------------------------- | End of March 2011 (indicative) | 32,000 | ├ ------------------------------------------------------- ------------------------------------- | End of June 2011 (indicative) | 64.000 | ├ ------------------------------------------------------- ------------------------------------- | End of September 2011 (indicative) | 95.600 | ├ ------------------------------------------------------- ------------------------------------- | End of December 2011 (indicative) | 128.550 | └ ------------------------------------------------------- ------------------------------------- -------- * 1) cumulated figures during the calendar year (for example, the March 2011 figure is cumulative as of January 2011). H. Indicative target for arrears at the level of local budgets The indicative target on the stock of internal arrears at the level of local budgets envisages the non-accumulation of new arrears and their reduction during the program. In case of necessity, the Government will take the corrective measures to prevent the accumulation of new arrears. In the program's acceptance, arrears means past payment amounts of maturity by 90 days (in accordance with the definition of ESA95 expenses). ┌ ------------------------------------------------------- ------------------------------------- | The stock of arrears at the level of local budgets | (in billion lei) | ├ ------------------------------------------------------- ------------------------------------- | End of December 2010 (stock, realized) | 0.91 | ├ ------------------------------------------------------- ------------------------------------- | End of March 2011 (indicative) | 0.95 | ├ ------------------------------------------------------- ------------------------------------- | End of June 2011 (indicative) | 0,90 | ├ ------------------------------------------------------- ------------------------------------- | End of September 2011 (indicative) | 0.85 | ├ ------------------------------------------------------- ------------------------------------- | End of December 2011 (indicative) | 0,80 | └ ------------------------------------------------------- ------------------------------------- I. Monitoring of public undertakings 20. A quarterly indicative target is set for 2011 for the operational aggregate balance (EBIT-earnings before interest and tax-earnings before interest and taxes and fees), excluding subsidies, accumulated per calendar year, for the following public enterprises: the National Railway Company "C.F.R." -S.A., National Company of Highways and National Roads of Romania-S.A., National Company of Huilei-S.A., National Company Posta Romana-S.A., Turkeni Energy Complex-S.A., Commercial Company Maintenance and Services Branch Energetic "Electrica Serv"-S.A., The Commercial Transport Company with the Bucharest Metro "Metrorex"-S.A., the National Railway Transport Society "C.F.R. Marfa"-S.A., the National Railway Transport Society " C.F.R. Travelers "-S.A., Commercial Society" National Romanian Air Transport Company "TAROM"-S.A., Electrocentrale Commercial Company Bucharest-S.A., Electric Commercial Company Supply Transilvania Nord-S.A., Commercial Company Oltchim-S.A., Commercial Company for Electric and Thermal Power Production "Termoelectrica"-S.A., National Lignite Company-S.A., Commercial Company Electrification CFR-S.A., Commercial Company Railway Intervention-S.A., Commercial Company Telecommunications C.F.R. -S.A. The data will be provided together with the operational results by the company. Targets will be the following: ┌ ------------------------------------------------------- ------------------------------------- | Operational aggregate balance * 1) | (in billion lei) | ├ ------------------------------------------------------- ------------------------------------- | End of December 2010 (realized) |-6.5 | ├ ------------------------------------------------------- ------------------------------------- | End of March 2011 (indicative) |-1.7 | ├ ------------------------------------------------------- ------------------------------------- | End of June 2011 (indicative) |-2.7 | ├ ------------------------------------------------------- ------------------------------------- | End of September 2011 (indicative) |-3.6 | ├ ------------------------------------------------------- ------------------------------------- | End of December 2011 (indicative) |-4,0 | └ ------------------------------------------------------- ------------------------------------- --------- * 1) cumulated figures during the calendar year (for example, the March 2011 figure is cumulative as of January 2011). 21. A quarterly indicative target shall be set for the year 2011 for the arrears stock of the state-owned enterprises listed in paragraph 20 above. The data will be provided at company level. Targets will be the following: ┌ ------------------------------------------------------- ------------------------------------- | The stock of arrears | (in billion lei) | ├ ------------------------------------------------------- ------------------------------------- | End of December 2010 (realized) | 18.8 | ├ ------------------------------------------------------- ------------------------------------- | End of March 2011 (indicative) | 19.5 | ├ ------------------------------------------------------- ------------------------------------- | End of June 2011 (indicative) | 19.5 | ├ ------------------------------------------------------- ------------------------------------- | End of September 2011 (indicative) | 19.0 | ├ ------------------------------------------------------- ------------------------------------- | End of December 2011 (indicative) | 18.0 | └ ------------------------------------------------------- ------------------------------------- 22. Quarterly indicative targets for the aggregate operational balance (paragraph 20) and arrears stock (paragraph 21) for the state-owned enterprises listed in paragraph 20 above will be reviewed at the date of the first assessment in accordance with action plans and verified data at the end of 2010 (both will be available at that time). J. Reporting Requirements 23. The performance under the program will be monitored based on the data provided to the IMF by the NBR and the MFP, as presented in the table below. The authorities will promptly forward to the IMF experts any data reviews as well as any other information necessary to monitor the agreement with the IMF. Romania: Providing data to the IMF *Font 8 * ┌ ------------------------------------------------------------ [...] | Article | Periodicity | ├ ------------------------------------------------------------ [...] | To be provided by the Ministry of Public Finance | ├ ------------------------------------------------------------ [...] | Preliminary monthly data on general budget accounts | Monthly, on the 25th of the following month | Consolidated | consolidated, including public enterprises defined on | | | ESA95 | | | | | | | | | Quarterly final data on general budget accounts | Quarterly, cash data, on the 35th day after | Consolidated | consolidated, including public enterprises defined on | term | | Basis ESA95 | Quarterly, accrual data, on the 55th day | | | after term | | | | | | Consolidated General Budget Deficit (BGC) using | Quarterly, with a 3-month gap | | ESA95 definition | | | | | | | | Preliminary data on sub-line funding for BGC | Monthly, with a gap of no more than 35 | | | | days after term | | | | | | Quarterly final data on sub-line funding | Quarterly, no later than 45 days | | | BGC | after term | | | | | | Total amounts of payment and total arrears of BGC, including | Preliminary monthly, during the month | Local budgets | next | | | | Quarterly, within 55 days | | | | | | The foreign arrears stock of the central government | Daily, with a gap of no more than | | | | 7 days | | | | | | Public debt and newly-issued government guarantees | Monthly, within one month | | | | | | Preliminary monthly data on primary expenses of | Preliminary monthly data will be reported | | BGC, net of EU funds | to IMF experts within 25 days | | | | | | Quarterly final data on primary expenses of | Quarterly, within 35 days | | BGC, net of EU funds | after term | | | | | | Operating balance, profits, arrears stock and | Quarterly, within 30 days | personnel expenses of the main enterprises | | | Public (defined in paragraphs 21 and 22) after total | | | | | | | | | | | | Data on grants for EU projects (reimbursements and | Monthly, within 3 weeks of | advances), capital expenditures and subsidies covered by the end of each month | EU advances or eligible for EU repayments related to | | EU-supported projects specifically agreed with the EU | | | | | | | | Balance of privatizations receipts recorded in the account | Monthly, within two weeks of | | State Treasury, details about amounts claimed from the end of each month | these receipts and projected net outflows | | | ├ ------------------------------------------------------------ [...] | To be provided by the National Bank of Romania | ├ ------------------------------------------------------------ [...] | AEN data, on components, both according to the exchange rate of | Weekly, every month after week | | program, as well as the real one | reporting and with a 3-day gap | | | working in the case of final data | | | Quarter | | | | | | Data on monetary analysis in the format agreed with | Monthly, within 30 days of | IMF experts | end of month | | | | | | Scheme of external contractual payments of the banking sector | Monthly, 45 days after the end of each | | due in the next 4 quarters, interest and amortization | Monday | | (for medium-and long-term loans) | | | | | | | | Scheme of external contractual payments of the sector | Monthly, 45 days after the end of each | corporatist due in the next 4 quarters, interest and | Monday | amortization (for medium and long-term loans) | | | | | | | | Short-term foreign debt stock of banks and | Monthly, 45 days after the end of each | | | corporations | Monday | | | | | | Balance of payments in the IMF format currently used | Monthly, 45 days after the end of each | for reporting | Monday | | | | | | Exposure-deposits, loans, subordinated loans | Monthly, 20 days after the end of each | | ale: | Monday | | (i) foreign parent banks to their subsidiaries in | | | | Romania; | | | (ii) international financial institutions (IFIs); and | | | (iii) other creditors to banks in Romania (in currency | | | | | national and foreign). | | | └ ------------------------------------------------------------ [...] -------
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