The Grand Master Says the Medicine is Working…For Now


As I’ve mentioned before, I tend not to follow the daily ins and outs of Romanian politics but I do keep an ever-vigilant eye on what the oleaginous Mugur Isarescu is up to at any given time.

I came across this article (in English) about Romania’s budgetary cutbacks and how they are affecting the healthcare system in this country, which included this:

Following a 7.1 per cent contraction last year, the Romanian economy is set to shrink by a further 1.9 per cent this year, in part owing to budgetary cuts required under Romania’s €20bn credit agreement with the International Monetary Fund.

Yes, in part. I see that one of the major pro-business media outlets in Romania, Saptamana Financiara (Finance Weekly) conducted a lengthy interview with Isarescu (in Romanian).

What follows is my translation of a portion of the article and therefore all errors are mine alone. I also broke up some of the lengthy block paragraphs to make it easier to read. Bolding is the questioner (SF newspaper):

Recently there has been a lot of public discussion about the contract Romania might sign to get a new loan from the IMF for next year, which many think will be a catastrophe for Romania. You sir, who are closest to the negotiations about IMF agreements, do you consider that it would be a catastrophe if Romania finds it necessary to agree to a new loan next year?

There are two plans here. In the first place, an agreement with the IMF is not in any way, shape or form a catastrophe. From a financial point of view, it is the cheapest source of financing.

With certain conditions being attached…

In general, with conditions attached. It must be said that nobody gives money without conditions attached. Not one creditor will give you money without conditions – that’s a fantasy that I see often see mentioned in the public debate on the issue.

I digress. In general, an agreement with the IMF should not be presented as being a catastrophe. The IMF shows up, actually, because that is the IMF’s role, when an economy is not going well, when the economy is ill.

And, as a consequence, many times illness is associated with having a relationship with the IMF. Or believe that the situation is reversed, that when an economy is ill that’s when the IMF shows up in one country or another, saying that the arrival of the IMF sends the economy into a tailspin.

Truthfully told, the IMF does not always have the solutions. But it is like a doctor, you know? When the doctor shows up it is normal to become frightened and take it as a bad sign. This does not mean that the doctor is bad, only that you have a problem with the economy.

Well there you go! See? We have no problems because like a good doctor, the IMF is here, cutting back the already pathetic salaries of our overworked doctors and nurses in order to cure the “sick” economy which, like many of us in colder weather, often catches a cold that needs a good dose of medicine to treat. Right?

I hate to even launch into a long-winded diatribe against the IMF for its many evil acts, so I won’t. You can read a short list of the results of some of their policies here. Or you can read about how the IMF helped destroy Haiti, or how the IMF helped destroy Iceland recently, including causing the collapse of its banks, which led to protests just this past weekend. Or the inhumanity of letting Mozambique suffer horrendously in order to pay back IMF loans. Etc, etc, including the famous near-total destructions of Russia and Argentina, both nations which are only clawing their way back to some kind of normalcy now.

I guess I (and all other people in Romania) should be breathing a sigh of relief that no new IMF loans are (apparently) currently in the works, at least according to Daddy Isarescu.

Nonetheless, the damage has already been done. The VAT (tax paid on just about everything) went up from 19% to 24% this year, specifically at the behest of the IMF. Although this is “just 5 percentage points”, anyone who can do basic math realizes this means prices went up 26%!

Literally almost everything in the country is now 26% more expensive, thanks to this crap, including things like food and children’s clothes, things which are a necessity for the least among us.

Furthermore, as everyone in Romania knows, these price increases went hand-in-hand with the cutting of public-sector salaries, including police, medical staff, teachers and sanitation workers – a true double whammy.

If you want a lengthy, academic analysis of the effects of IMF policies world-wide, including the recent global “crisis”, click here (PDF).

I guess however we should be grateful that, at least for now, Daddy Isarescu says we’re all suffering enough and that Doctor IMF’s medicine seems to be working just fine, so no reason to fear! Whew, what a relief, even if the Good Doctor’s medicine is driving Romanian businesses to next-door Bulgaria, thus reducing salaries and good jobs even further in this country.

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