Tuesday, March 3, 2009

Romania assessing financing support from IMF, Europe

By Kerstin Gehmlich
BERLIN, March 3 (Reuters) - Romania is assessing its options on securing external financial support, looking at both International Monetary Fund and European help, Foreign Minister Cristian Diaconescu said on Tuesday.

Diaconescu spoke to Reuters in Berlin after Germany's foreign minister confirmed Bucharest was in talks with the IMF to secure aid as it faces up to liquidity problems due to its reliance on external financing in the global credit crunch.

The Romanian government had previously declined to comment on reports that it was in talks about a loan from the IMF, saying only that a team was in Washington for discussions on economic developments.

Diaconescu said the economic crisis had also complicated Romania's efforts to seal a planned multi-billion euro fighter jet purchase in the near future, a deal aimed at replacing its ailing Soviet-era MiGs airforce.

"We discussed possibilities of financial input to my country," Diaconescu said, referring to his talks with Foreign Minister Frank-Walter Steinmeier.

"That's not only a question of taking IMF support into account but also some European support," he said.

"For the time being, Romania is ... (assessing how) -- if it should be necessary -- ... we should appropriate some financial support. But not only from the IMF, there are sufficient European banks which should be considered."

Diaconescu declined to say what amount Romania would be targeting in any talks with the IMF. He did not elaborate on which European banks he was referring to.

"We are not in a phase to submit a certain amount of money," he said.

"For the time being, we don't know which might be the amount or threshold because we just approved the budget in Romania. This budget has certain capabilities and opportunities with regards to financing the deficit."

FIGHTER JETS
Since the financial crisis accelerated in October, Romania has turned from being the EU's fastest-growing economy to one of its most vulnerable as big hard currency debt and budget deficits fanned external imbalances.

Bucharest's centre-left government has already approached the EU over possible financial aid. After winning power on social spending promises in a November parliamentary election, the coalition is struggling to slash state spending to meet the EU's deficit ceiling of 3 percent of GDP.
Diaconescu said the crisis weighed on Romania's plans to buy fighter planes to bring its air force up to NATO standards.

"I don't expect to have this kind of big project very near in the future," he said. "For the time being, we don't have a decision with regard to purchasing new combat aircraft."

Bucharest came close to finalising a purchase plan last year with government ministers saying a decision was only "weeks away" in September, but it was put on hold after November's election gave power to the new cabinet.

Five aircraft were in the running for the deal estimated by the previous centrist government to top 4 billion euros. Its choices included: the F-16 built by Lockheed Martin Corp , the F-18 from Boeing Co , the Rafale from France's Dassault , the Grippen from Sweden's SAAB and the Eurofighter from EADS . (Reporting by Kerstin Gehmlich; editing by Patrick Graham)

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