Crucial week for Romania. IMF aid deal at risk of being interrupted

International Monetary Fund and World Bank are expected to arrive in Romania this week, although it is still not known whom they will meet. Boc’s Cabinet collapsed and has no room for maneuver, while the government formed by designated PM Lucian Croitoru waits for the vote of confidence from the Parliament.

Initially, IMF and WB’s visit had been postponed until a new government emerged. Shortly after, the two institutions changed their plans and decided to conduct a follow-up mission.

IMF will thus send a mission to Bucharest for October 28 – November 9 to initiate a round of talks with the Romanian authorities for a second review under the SBA, however, further consultations could be needed after a new government is formed.

“In response to the request made by the President of Romania, IMF will send a mission to Bucharest for October 28 – November 9”, said IMF’s mission chief, Jeffrey Franks.

During this visit, IMF will assess the recent economic performance of the country and will discuss with the authorities the economic objectives for next year, as well as economic policies and structural reforms that the country needs to meet these goals.

“The successful completion of the second review will require a broad-based political commitment for passing the 2010 budget that would envisage a maximum budget gap of 5.9%. After reaching an agreement on core macro and fiscal policies for running the program, the executive board of IMF will meet to discuss the report, which would determine the disbursement of the 1.409 DST (€1.5 bln) tranche”, IMF mission chief said.

European Commission said it would send a mission to Bucharest to assess the country’s balance of payments compliance with the conditions under the financing package deal.