Conclusions after the MF delegation’s trip to Washington: Romania will have support for fiscal consolidation and increased infrastructure investments

The Minister of Finance, Marcel Boloș, led, between April 16-21, 2024, the MF delegation at the spring meetings of the World Bank Group and the International Monetary Fund, in Washington. On the sidelines of the meetings, the MF delegation had meetings with high representatives of the World Bank (WB), the International Monetary Fund (IMF), the International Finance Corporation (IFC), as well as with the rating agencies S&P and Moody’s.

Meetings with representatives of the World Bank

The MF delegation had meetings with Mr. Eugene Rhuggenaath, the executive director of the Dutch Constituency of which Romania is also a part, and with Mrs. Antonella Bassani, Vice President for Europe and Central Asia, from the World Bank. Discussions focused on the World Bank’s investments in key areas such as education, health, development policies aimed at green and inclusive growth, and disaster risk management.

The Minister of Finance stated that Romania needs the support of international partners so that all the opportunities we have through the PNRR (29 billion euros) and the Cohesion Policy (46 billion euros) are capitalized on.

Also, the loans contracted by Romania from the World Bank, under implementation, as well as the portfolio of loans under preparation, were reviewed.

In this sense, the representatives of the World Bank assured that they will speed up the contracting process for loans of approximately one billion euros for:

• development policies aimed at green and inclusive growth (Development Policy Financing/Loan – DPF/DPL);
• risk management in case of catastrophes (Catastrophic Deferred Drawdown Option – CAT-DDO).

The Romanian Minister of Finance conveyed to the World Bank officials that he continues to rely on the IFC’s support for private investments in Romania, by identifying new financing opportunities, to contribute to the reduction of infrastructure gaps at the level of transport, renewable energy, waste and water treatment . In this sense, he invited the technical teams of the World Bank in Romania to collaborate with the MF team.

Romania is the first country in the IFC portfolio, with 2.1 billion dollars, having the tenth largest exposure globally, with over 7 billion dollars invested in various sectors, since 1991.

Meeting with the team of the Fiscal Affairs Department (FAD) of the International Monetary Fund

The discussions focused on the measures to modernize the National Tax Administration Agency, which must lead to the improvement of the collection of tax revenues by 2.5% of GDP, as well as those to combat tax evasion.

“We maintain our commitment to promote macroeconomic stability and are firmly committed to an extensive process of reforms, which result in the growth of the Romanian economy and the support of a new framework for sustainable, fair and inclusive development”emphasized Minister Boloș.

At the same time, the Minister of Finance thanked the IMF for its constant support in the field of fiscal administration, through its series of technical assistance.

Meeting with representatives of the International Finance Corporation (IFC)

During the discussions, the IFC representatives gave assurances that they will continue to support private investments in Romania, by identifying new financing opportunities and by responding to new needs to mobilize private investments, in order to contribute to the reduction of infrastructure gaps in Romania, energy renewables, waste and water treatment. IFC also wants to be actively involved in supporting the implementation of priority public-private partnership (PPP) projects in the field of health, transport or waste management.

A priority will also remain the strengthening of the financial sustainability of the banking sector (e.g. participating by subscribing to the issues of senior non-privileged bonds launched by banks) and granting financing lines to financial institutions in Romania to finance measures to reduce the impact of climate change . At the same time, IFC will remain active in the field of technical assistance (eg Green Banking Academy) offered to the financial sector to support the transition to the green economy and reduce the risks generated by climate change for these institutions.

Meetings with representatives of the International Monetary Fund

The last day of the work program in Washington included discussions with senior representatives of the International Monetary Fund, Paul Hilbers, executive director for the IMF Constituency of which Romania is a part, Kenji Okamura, deputy director of the institution, and Alfred Kammer, director for Europe .

Together with the Vice-Governor of the National Bank of Romania, Mr. Leonardo Badea, the Minister of Finance presented the efforts supported by Romania to maintain macroeconomic stability in Romania, welcomed by the IMF team.

Seen from across the ocean, despite the risks that persist at NATO’s gates, Romania continues to represent a regional factor of balance, given the existing geopolitical tensions and economic disruptions.

During the discussions, they were presented with the action plan for increasing the level of revenue collection in the general consolidated state budget for 2024, a package that includes digitization measures to increase collection and combat tax evasion.

“I told them about the investments with a cumulative value of more than 8% of GDP until 2026, which we are preparing in the coming years, with an emphasis on the implementation of the PNRR. The vast majority of them are infrastructure projects that will help reduce transport costs both in terms of time and cost, improving the profitability of companies, which will generate additional flows of foreign direct investment”Minister Marcel Boloș sent.

Meetings with rating agencies S&P and Moody’s

The Romanian side presented to the rating agencies the economic particularities of Romania, as well as the strategies, structural reforms, responsible fiscal policies intended to ensure long-term macroeconomic stability.

The Minister of Finance specified that we are engaged in a process of modernization of Romania through European funds, national funds and the reforms included in the National Recovery and Resilience Plan and that our expectations are that these reforms will generate the modernization of the state Romanian and the public administration, the sustainability of certain categories of public spending that we currently have, which will lead to economic growth maintained at a pace that we have had so far.

“We count on this economic growth as one of our basic pillars for sustainable development. Also, we are considering fiscal consolidation leading to the modernization of our fiscal system, through measures to combat fiscal evasion or the implementation of digitization projects. Romania is committed to this irreversible path of modernization and the implementation of investment projects and is also committed to carrying out reforms that lead to the sustainability of public spending that Romania has”concluded Minister Marcel Boloș.

The delegation of the Ministry of Finance included the secretaries of state, Mrs. Carmen Moraru and Mr. Alin Andries, Mr. Petronel Munteanu, deputy general secretary and the technical team from the General Directorate of International Financial Relations.