Franks thereby let it be understood that expenditure must be reduced, either by salary cuts or layoffs, and the future government will have to decide what to cut. Over 100,000 civil servants are targeted for layoff next year, but also several tens of thousands of employees of state-owned companies that receive subsidies.
Half a billion euro, or RON 1.6 bln, is the value of subsidies the Romanian state deposited last year in the accounts of three of the ten state-owned companies, which the International Monetary Fund (IMF) has requested have their expenses monitored. Of these, only three confirmed yesterday for Business Standard that they receive state subsidies: CFR Calatori, Metrorex, and Compania Nationala a Huilei (CNH). The Romanian authorities are due to present their conclusions today to IMF officials on restructuring plans and viability of the monitored state companies.
“This will be a final discussion with the IMF on the subject of subventions, on plans for restructuring and making these profitable, but also on the number of layoffs that will be necessary,” according to a declaration for Business Standard by sources close to the discussions between the authorities and the IMF. These added that the number will most likely be at least “several thousand persons.” “IMF’s vocabulary does not include the word subsidy, and it is demanding the same of us. Let’s see what we can do,” added the quoted sources.
According to these sources, “CNH receives subsidies worth RON 1,400 on revenue of RON 1,000, while Metrorex is given RON 2,800 on RON 1,000, but CNH’s image is much than that of Metrorex, and it has more debts to the budget.” With few exceptions, the 10 companies being monitored, which employ some 100,000, ended 2008 with losses almost double, stagnant, or slightly down compared to those the year before. CFR Calatori receives annually over RON 1 billion from the state budget to ensure railroad passenger transport. “Everywhere in Europe, railway transport is subsidized. It is considered a social service, so there is no question of cancelling subsidies. The IMF has merely asked us to keep expenditure under control,” according to a declaration yesterday for Business Standard by Liviu Pescarasu, General Manager of CFR Calatori. The company has over 17,000 employees, and ended 2008 with losses worth RON 260 million (€70.6 mln ), double year-on-year, with turnover worth RON 2.1 billion (€0.57 bln), slightly higher than in 2007. Metrorex also does not believe that subsidies it receives for the Bucharest subway will disappear, because the service is social. “It is not the underground that is subsidised, but rather the traveler. If subsidies were to disappear, the price for a traveler would have to be raised to about one euro,” explained Gheorghe Udriste, General Manager of Metrorex.
