Tuesday, March 10, 2009

EU says Romania eager to secure rescue funds

BRUSSELS, March 9 (Reuters) - The European Union is ready to negotiate with its member Romania financial aid to support its economy against the impact of the global financial crisis, EU Monetary Affairs Commissioner Joaquin Almunia said on Monday.

The aid would come from a special EU fund, already tapped by Hungary and Latvia, for its members outside the euro zone with balance-of-payment problems.

"They (Romania) are interested in the cooperation we had with Latvia and Hungary," Almunia told a news conference after a meeting of euro zone finance ministers.

Hungary and Latvia have received 6.5 billion euros ($8.22 billion) from the fund and Latvia 3.1 billion as part of wider aid packages backed by the International Monetary Fund after they faced currency, bond and stock sell-offs.

Many investors have been trimming their exposure to central and eastern European countries on fears they may be hit especially hard by the global financial crisis.

"We will need to have conversations with the Romanian authorities, with the IMF. We will need to estimate financial needs and establish a list of conditions," Almunia said.

The IMF and the EU have asked Hungary and Latvia to tighten their fiscal policies as a condition for loan, a demand that is likely to be unpopular in Romania, which has faced public protests against hardships coming from the crisis.

The IMF announced its mission would arrive in Romania on Wednesday for talks on aid potential programme. Romanian President Traian Basescu said on Monday his country needs external funding to prevent a crisis in its private sector.

Almunia rejected a call by Austria's finance minister that the fund for non-euro zone EU members be increased further after it was raised to 25 billion euros from 12 billion last year.

"At the moment we have resources that are more than sufficient to meet the needs of a further European contribution in the context of Romania," he said.

"I don't think we'll need to go beyond present limits even if there are new applications from countries."

Almunia and Jean-Claude Juncker, chairman of the Eurogroup of euro zone finance ministers, repeated that there should be no regional approach to helping central and east European countries, insisting any support should be case-by-case.

"We refuse to accept that they represent one bloc -- that has no longer applied since the fall of the Berlin Wall. We will resist any attempt to divide Europe into two parts, we have solidarity in the EU," Juncker told the news conference.

(Reporting by Mark John and Jan Strupczewski, writing by Marcin Grajewski)

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