Romania has agreed in March on a rescue package of nearly 20 bln euros. International Monetary Fund will contribute with 12.95 bln euros, European Commission with 5 billion euros, and the remaining 2 bln euros from other international financial institutions.
Boc reminded that the money from IMF would be used primarily to strengthen the currency reserves, while the funds provided by EC and World Bank would cover the budget deficit. The remaining 1 bln euros from EBRD would shore up banks and their lending activity.
The prime minister added that the loan agreement due to be tackled on May 4 and 6 by IMF board and Ecofin will gather the finance ministers in EU.
The IMF arrangement would stimulate the revival of lending, secure wages and pensions, create new jobs and restore the economic system, Boc stressed.
The conditions attached to the IMF loan include a revision of the budget (already passed through the emergency ordinance) which adjusted the deficit by 1.1 of gross domestic product.
This year, three new laws will be passed: unique wage law, fiscal responsibility law, and the law on pension system reform.
“With or without an agreement with IMF, these laws were absolutely necessary to Romania,” Boc added.
Romanian authorities have received on Wednesday the letter from International Monetary Fund, Emil Boc urging for immediate Government session.
The Executive expects to receive the first installment of 5 bln euro from IMF in May 15.
IMF and EC experts will arrive in Bucharest on July 10 to assess the Romanian economy, and if the state revenues miss forecasts, a new budget revision will be necessary in Q3, said the secretary of state at the Ministry of Finances, Gheorghe Gherghina.
He added that if an increase in VAT will be a solution to raise state revenues “the peril of a hyperinflation and of failure to meet the requirements to the euro area in 2012 will remain”.
International Monetary Fund urged Romania in a memorandum attached to the letter sent to Romanian authorities, to keep the budget deficit under 14.5 bln lei at the end of first half of 2009, namely 2.73% of GDP.
Sources in the Government said the International Monetary Fund had attached a memorandum to the letter sent yesterday which includes technical details, such as to meet the quarterly limits on budget deficit.
“In the event of a failure of the state to meet quarterly limits on budget deficit set at 14.5 bln euros, experts from International Monetary Fund and European Commission may request the Government to proceed with another revision of the budget, with the occasion of a first review of conditions attached to the external loan scheduled for July”, officials said.
On Wednesday, the state secretary of the Ministry of Finance, Gheorghe Gherghina, said that experts from IMF and EC are expected to arrive in Romania on July 10 for an assessment of Romanian economy, and if the revenues are short of projections, a new budget revision will be made in third quarter.
“If the annual state revenues will prove to be short of expectations, it will be made an additional letter together with the representatives of European Commission and International Monetary Fund, when it is very likely to resort to new measures to meet the budget deficit projected at 4.6% of GDP. If we fail to meet the state revenues goal, they will urge for new actions to increase revenues or to cut spending”, said Gherghina.
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