REMEMBRANCE IN TIME - Index of

328
Remembrance in Time
This man held the position of Romanian Minister of Finance from February 1981 to
August 1986.
Policy and the IMF loans allow member countries, upon request, when they were in a
difficult financial situation. The basis of such a program loan was agreed, confirmed by
letter of the government and resulted in an arrangement "standby". The advantage of
these loans was primarily less interest than is paid on financial markets and a unique
commission of 0.5%. The amount of credit was always established in SDRs, converted,
usually to dollars. In 1982, one SDR was equal to U.S. $ 1.16. Usually, the loan is
granted in instalments, the deadlines set out above, but depending on the fulfillment of
certain measures agreed in the agreement "standby" checked thoroughly by the IMF on
the spot.
Measures required for countries seeking IMF financial assistance have been and are
often very hard, from the rules of market economy: price liberalization, elimination of all
subsidies by the state, restrict government spending with government, education, health
etc. Statistically, this action by the States that have signed agreements with the IMF
resulted in 98% cases of the population to violent protests and street signs. In the opinion
of many Romanian and foreign economists, the IMF, with these requirements, promoting
the expansion of free-style economy in the world.
Romania, in the early 80s, was among the few countries where the demonstrations
did not appear due to very strict regime of monitoring the population and preventive
actions carried out by Securitate. Located on the second loan agreement with IMF (of
three each have existed between 1975-1989), Romania has met almost all measures
agreed, receiving a total credit of $ 1.5 billion, paid in three installments quarterly.
Steps to obtain the loan, as Petre Gigea writes in his memoirs, were those applicable
to the present: the Romanian government signed a letter of intent, then developing an
economic memorandum, an action plan, and finally Loan Agreement "standby". All
these documents have been negotiated and prepared jointly by representatives of the
Romanian Government and IMF team present in Bucharest. Following negotiations
"heavy and hard" to describe Petre Gigea, chief negotiator on behalf of Romania, it
was concluded that it hadn’t applied a shock therapy, but a gradual increase in prices
and tariffs for the population and reducing costs budget administration, education,
health and culture. Specifically, the measures agreed in the "adjustment program"
aimed at increasing domestic prices for fuels (gas, coal, gasoline, diesel), electric
power, reducing subsidies to industry and agriculture (for example, the textile
industry were reduced subsidies for school uniforms and children's clothing),
reducing imports, especially the oil, increasing bank interest rates, currency
devaluation by changing the ratio leu-dollar trade deficit and, finally, settlement
payments in arrears to Western banks. Loan of $ 1.5 billion has obtained Romania, a
3.5% annual interest (interest on financial markets was over 7%), with the agreement
signed with the IMF was a guarantee for the entire international community, whether
it was about Western bankers and governments, that the Romanian state will meet its
financial obligations 4 .
4 Dumitru Constantin, Cum şi ce a negociat România cu FMI în anii ’80, (How and what
negotiated Romania with IMF in 80s) in „Cotidianul”, 26 mai 1980.