European Commission attaches "to-do list" to Romania's Resilience Plan

The European Commission insisted on attaching a list of reforms ("to-do list") on the EUR 16 bln soft loan extended to Romania under the Relaunch and Resilience Plan, according to Ziarul Financiar daily quoting sources familiar to the talks.

Furthermore, the EC will invite the International Monetary Fund (IMF) to assist it in monitoring the execution of the reforms included in the to-do list.

IMF's involvement would not be unexpected, as the Fund has served as a monitoring body for the Commission's macroeconomic assistance program run in parallel with its own Stand by Arrangements. But Fund's involvement in combination with a to-do list that strikingly resembles the ones included in the Fund's SBAs puts into a different light the Government's plans. The opposition is very likely to accuse the Government of "austerity measures."

Separately, the minister of investments and European funds, Cristian Ghinea, reportedly advocates for first using the EUR 16 bln soft loan - and only in a second stage absorbing the grants. Ghinea reportedly wants the EUR 16 bln borrowed quickly and argues that his ministry does not have the necessary capacity to absorb the grants.

Notably, not all the countries decided to use the entire portion of soft loans allotted by the Commission - some of them accepted only the grants (which will be paid by all countries by temporarily increased contribution to the EU budget).

Minister of finance Alexandru Nazare rejected quick borrowing of the entire EUR 16 bln (7% of GDP) soft loans since this would push up the country's indebtedness ratios.

Irrespective of the strategy eventually decided by the Government, the IMF's monitoring will provide certain confidence as regards the implementation of the promised reforms (to the extent the reforms included in the SBAs were implemented) - but the austerity measures starting with making the pension system more sustainable to using more green (expensive) electricity are likely to create social tensions.

(Photo source: Pixabay.com)