The head of the International Monetary Fund Christine Lagarde could cancel her visit to Romania scheduled for July 16 if the eastern European country fails to select a winner for the majority stake in state-run freight rail company CFR Marfa by the agreed deadline.
CFR Marfa’s privatization is prerequisite for the successful completion of a EUR3.6 billion loan agreement Romania and the IMF have signed over two years ago.
Romanian Transport Minister Relu Fenechiu said earlier Thursday that the only remaining bidder in the privatization process of 51% in CFR Marfa might be disqualified due to a series of conditions attached to its purchase offer.
The deadline to select a winner expires on June 21.
If the privatization is postponed beyond that deadline, the IMF Board could decide not to complete the seventh and eighth reviews of Romania’s progress under the loan agreement, people familiar with the matter told Mediafax.
According to Romania’s latest letter of intent to the IMF agreement, the European nation has missed over half of its goals under the program, including a long-overdue reduction in government arrears.
The authorities in Bucharest have applied for IMF waivers on the failed targets, pledging a series of “corrective measures,” the document obtained by Mediafax noted.
Romania and the IMF have signed a two-year EUR3.6 billion loan agreement in 2011, successor to a larger EUR13 billion deal secured in 2009. The program was initially due for completion in April this year, but the government has requested a three-month extension to meet the IMF requirements.
A positive review of Romania’s program could open the way for a new agreement with the international institution, whereas a negative assessment would mean that the country’s loan program would expire de facto.