Romania to borrow EUR 13bn from the IMF, other 5bn from international financial institutions

Romania could take 13 billion euros, of the 18 billion euro loan, from the International Monetary Fund (IMF) while the rest of the money will be borrowed from the European Commission, the World Bank or other financial institutions, people close to the negotiations told NewsIn.

Romania could ink a two-year accord with the International Monetary Fund (IMF) and receive an 18 billion euro loan to cope with the economic crisis which generated dwindling incomes to the state budget, officials told NewsIn earlier this evening.

However, this does not mean the country's economic evaluation is over.

The standard procedure requires the IMF to complete a letter of intent and a memorandum of economic policies after negotiations between the two parties end, documents which have to be signed by the Romanian representatives afterwards.

The IMF delegation which is in Romania until March 25, met today the president and the premier to discuss possible loan, a subject which has sparked controversies among politicians, people familiar with the situation said today.

The governor of the central bank BNR also attended the meeting.

A mission of the IMF has arrived in Bucharest on March 11 and is currently assessing the economy and negotiating a financial aid for Romania, part of a multilateral financing package including the European Union and the World Bank.

After the first round of talks, the finance minister declared last week Romania’s economy is to inch -1 percent to 1.5 percent this year. Moreover, the IMF is said to have agreed to the widening of the country’s commercial gap this year, according to people close to the negotiations. However, the IMF’s conditions attached to the loan remain unknown, same as the value of the credit.

Romania’s 2009 budget is built on a 2.5 percent economic growth with the gross domestic product estimated at 579 billion lei and a 2 percent budget gap target.

As for the IMF loan, the idea stirred controversies inside the ruling coalition, but also among lawmakers, some claiming such a move would have disastrous social effects.
“I am optimistic,” president Traian Basescu said on March 12. A loan from the IMF would not result into a social disaster, as some put it, but on the contrary, will help spare the people from a difficult situation and also contribute to the country’s modernization, he added.

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