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Jeffrey Franks (IMF): No tragedy if Romania is not ready to join Euro Zone in 2015

In order to adhere to the Euro Zone in 2015, Romania must speed up the pace of reforms, have a low deficit, a reduced inflation, a low level of debt and interests, the head of the International Monetary Fund (IMF) mission to Romania Jeffrey Franks told Agerpres in an interview, by adding that from his viewpoint, it is not so important the year Romania is going to enter the Euro zone, but to speed up the reform pace.

Jeffrey Franks also said Romania could export more food products and import less in the conditions of a reformed agricultural sector and he considers a mistake the idea of trimming the contributions in the Pension Pillar II (compulsory private pension funds).

According to Franks, the measure of cutting the social security (CAS) by some percentage points is a minor factor in boosting extra investments and developing the business activity. Setting up the conditions for Romania's development would be a much more powerful factor.

Romania needs a fiscal system provided with a larger collection range and lower taxation levels, the IMF chief for Romania said too. Over the next five years, let's say, I would like to see not only a cut in the CAS, but also a reduced Value Added Tax. You shall be able to take these measures only by collecting enough money. We cannot start by tax-slashing measures and hope money will flow afterwards, Franks explains.

When referring to the companies where the state is the main shareholder, Jeffrey Franks said in some cases the majority packages owned by the state will have to turn into private hands, while other companies might be shut down.

Franks added that he discussed with the Government to select some of the most important 30-40 state-run companies and to hire an independent firm for making some suggestions regarding the management of the Romanian state-run companies, in order for the selection to be independent and objective.

According to Franks, on its latest visit, 'for reasons I do not know, the opposition parties decided not to come to any meeting. It is very important to me to listen to all opinions, coming from different domains. But, if the parties made this choice, I cannot force them to do otherwise', Franks also said.

When asked about the IMF stance on closing over tens of hospitals in Romania starting April 1, Franks said the decision on the health care reform rests with the Government alone. This is not the decision of the IMF and I am no expert in health reforms, so I cannot tell the authorities what the optimal policy would be. The Government has its own experts to decide which policy is the best. We only inform them that they must take into account aspects related both to expenditures and revenues, said the IMF official.