Monday, February 16, 2009

Romania to decide in 2 weeks if IMF help needed-PM

BUCHAREST, Feb 16 (Reuters) - Romania will decide within two weeks whether it will ask for financial support from the International Monetary Fund, Prime Minister Emil Boc said on Monday.

Many economists have said the European Union member state may be next in line to seek financial aid from an international institution, following several of its eastern European peers, as the global crisis cuts off sources of cash.

The risks stem from the private sector where banks have been lending heavily in recent years, particularly in hard currency, raising doubts over Romania's ability to continue funding its external shortfall.

'In two weeks we will have an answer whether to ask for IMF help and how,' Boc told a financial seminar. 'Any IMF agreement should pass through the EU Commission but it's not the other way around.'

An adviser of the prime minister stressed the importance of an IMF deal for Romania in mitigating the impact of the global financial crisis.

'I hope (we get an IMF agreement). It's important,' Ionut Popescu told Reuters.

Ratings agency Moody's told Reuters in an interview on Friday that funding aid from the European Union or the IMF may be necessary for Romania to keep its rating.

Moody's is the only major rating agency to grade Romania investment grade after Standard & Poor's and Fitch cut it to 'junk' last year, largely because of concerns over an inadequate fiscal policy response to external imbalances.

President Traian Basescu, who has been wary about the idea of tapping the IMF for help, has said Romania may have to get a loan from the EU with IMF supervision. Central bank Governor Mugur Isarescu has also said an EU loan 'would not hurt'.

(Reporting by Justyna Pawlak; Writing by Marius Zaharia; Editing by ...) Keywords: ROMANIA IMF/

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