Posted by: mbconsulting | May 11, 2010

IMF & Romania – Hard Lessons

TitleIMF & Romania – Hard Lessons
Subtitle: Father (IMF) Has a Discussion/ Quarrel with His Child (Romania)

The last monitoring visit of IMF in Romania was the longest and, perhaps, the most difficult one. The Romanian Government prepared the lessons, but seem to be done superficial and therefore an additional act was prepared and submitted to IMF.

IMF administrated hard lessons to Romania, but, God thanks,somebody did it and Romania is still under its slowly way to economic recovery. Let me explain what was happened:

  • Lesson 1: Figures and Facts – The real status of economy. IMF collected the figures from government and from NBR (National Bank of Romania) and concluded. The lesson was presented by Mr. Mugur Isarescu, the President of NBR, and the students were mainly politicians, different political parties, from from the Parliament, but also some members from the government. I think that also Mr. Basescu learnt how to build an economic argument.

Based on the figures and facts resulted that during 2006 -2008, in Romanian, the public expenditure were increased, including here the staff salaries, the number of public servants was increased with 250,000, the amount of money spent with pensions was increased in a non-sustainable way and finally;the budget deficit increased even if there was a boom in economy. No political debates, only figures and facts. Based on these the scenarios were presented and discussed.

  • Lesson 2: Listening – harmonize the interests.The teacher was Jeffrey Franks and the students were the Romanian President, the members of Government and of Parliament. The objective: problems and different opinions are normal issues in a modern society, democracy and economy must harmonize them, therefore stop talking alone and start listening.

The democracy and economy are meant to develop the society for large number of people, for the crowd, and therefore it is logic and reasonable to exist different opinions and different arguments. The best decisions are the ones taken in a rational way, not emotional, after listening all the parties involved and after harmonized them. Do not assume that you know what the other part is thinking.

  • Lesson 3 – Decision – three steps: First -discuss, second – in-house amend, third – present proposal. The Romanian Government missed the targets regarding the legislations/decisions because it was always  in a too much hurry, never enough prepared, too many weak points, too many disagreements inside the government, lack of support inside and outside the government.

During the implementation of governmental proposals there were so many irregularities therefore new amendments were/are necessary. The government was  so inefficient, its work was like the building from Romanian poetry “Manole – The craftsman”: whatever  was built during the day, it was destroyed during the night. Going ahead with the parallelism,  as Manole , the craftsman, built inside his wife in order to have a strong construction so Mr. Basescu must sort with Mr. Boc – PM, if the President would like to have an economic recovery in Romania.( Please also see lesson 5)

  • Lesson 4 – Transparency. There is lack of transparency in all the public sectors: national, regional or local. The teacher, IMF, recommended that figures, facts, decisions, trends must be presented to electors, political parties and other political and non-political forces. The students were member of Romanian government and Mr. Basescu.
  • Lesson 5Patience  and realism in economy. The teacher IMF, the student, President Mr. Basescu, ex-commander on large naval vessels. The objective: understanding and dealing with economy.

The economy is like a huge vessel, from the moment that you decided to modify until it is really changed is taken a while, and therefore: patience. In spite of Mr. Basescu’s engagements, IMF established larger terms/realistic ones for implementing the agreed actions. IMF took in consideration the possible resistance to changes , but also the above mentioned delays.

Also, because economy has so many unknown elements and works with uncertainties it is 1% art and 99% science, but without that piece of art you would not change an economy. Nobody is sure about the directions in economy and in a global economy there are so many influences that you have to monitor the evolution and only then you see stable/predictable trends you may say: “I changed it”.

For people with strong charisma, like some of our politicians, the hardest lessons were lessons no.1,2 and 4. Hope that this on job training will bring under the spot more mature leaders, with more realistic opinions and reasons.

In conclusion, I would like to thank for the efforts performed by the representatives from IMF and from Romania and carefully look straight ahead, with a realistic hope for a better life and more money in the pocket.

A richer person,

P.S. 1. Jeffrey Franks showed that he could literally understand Romanians. He read and spoke in Romanian. Congratulations!

P.S.2. Why did JF visit  CSM (Supreme Court)? It was necessary to be sure that the judges would not opposed to their salaries reductions? It was for checking about the best legal way to propose amendments? It was regarding the anti-corruption agency and its legislation???  I am only assuming all these and something more, but I am not sure at all. Curiosity…Time will reveal the reasons.


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