Wednesday, February 18, 2009

National Bank Gov says Romania may need IMF loan

Romania's top banking official said Wednesday he was considering the possibility of asking for a loan from the International Monetary Fund to protect foreign currency reserves as the economic crisis his the country.

"We do not exclude a loan from the International Monetary Fund. ... We are thinking about a package to consist also of European funds, such as money for projects from the European Investment Bank," said Mugur Isarescu, the governor of the National Bank of Romania.

He said the funds could help protect foreign currency reserves, which stood at euro26.2 billion ($33 billion) at the end of December.

Isarescu called estimates made by foreign analysts that Romania needs euro30-40 billion ($37.8-50 billion) in 2009 "too high." But he did not say how much Romania would seek.

The IMF warned earlier this month that Romania could slide into recession this year as its economic vulnerability has been raised by high trade and fiscal deficits. The government aims to narrow the deficit to 2 percent of gross domestic product this year, from more than 5 percent last year, partly by freezing state wages.

The Romanian national currency, the leu, has lost about 20 percent of its value in the past year. Unemployment is set to grow to more than 5 percent this year, the government predicts, with thousands of layoffs in the automobile and other industries.

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