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Romania postpones rail company sale required by IMF
June 20, 2013 / 1:46 PM / 4 years ago

Romania postpones rail company sale required by IMF

BUCHAREST (Reuters) - Romania’s planned sale of state rail freight carrier CFR Marfa was delayed further on Thursday, only days before the International Monetary Fund (IMF) reviews the country’s 5 billion euro (4.3 billion pounds) aid deal.

The privatisation of CFR Marfa was one of the requirements of the aid agreement designed to shore up Romania’s finances and stabilise the leu currency, but the sale process has been hit by one problem after another.

Transport Minister Relu Fenechiu said on Thursday that sole remaining bidder Grup Feroviar Roman (GFR) had offered more than 180 million euros for CFR Marfa but that it attached conditions that require further negotiation, without giving details.

The process is complicated further by the possibility of legal challenges from two bidders that had pulled out of the tender. American company OmniTRAX and a consortium comprising Austria’s Donau-Finanz and Romanian Transferoviar Grup said they withdrew from the tender because of short deadlines that made it impossible to assess CFR Marfa.

Prime Minister Victor Ponta defended the tender on Thursday. “I don’t expect everybody to be satisfied,” he told reporters. “The process was as transparent as could be.”

But with the sale on hold, it is unclear whether the IMF will say Romania has met its obligations under the aid deal or whether it will agree another extension.

The IMF declined to comment on Thursday, but Daniel Hewitt, emerging Europe economist at Barclays Capital, said that it would be difficult for the IMF to say Romania has failed in its obligations because governments have made considerable progress in other areas.

“From the IMF’s point of view, they need a better reason to flunk them (Romania),” Hewitt said.

The European Union’s second-poorest economy has required IMF aid since 2009. Romania has not drawn on funds from the current aid agreement, but the deal was crucial for its financial credibility.

Successive cabinets have made great strides in lowering the budget deficit to below the EU’s 3 percent threshold, but all have repeatedly delayed asset sales and reforms of state-owned companies.

Editing by David Goodman

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