Tuesday, March 10, 2009

Romania Will Need External Financing, President Says

By Adam Brown and Irina Savu

March 9 (Bloomberg) -- Romania’s government needs external financing this year to cover its current-account gap, President Traian Basescu said in a speech that backed government moves to negotiate with international lenders.

“Romania needs a seat belt,” Basescu told the Bucharest- based Parliament, which may have to approve any external financing for the country this year. “Such a loan would make us more resistant to a potential rapid deterioration of the global economy.”

Economies in eastern Europe are cooling or shrinking after years of booming growth as a slowdown in western Europe, the region’s main trading partner, curtails foreign investment. Real- estate prices have plunged, factory closures are pushing up unemployment and credit has dried up.

Romanian Finance Minister Gheorghe Pogea has said the government intends to seek financing from international lenders such as the European Union and the International Monetary Fund to cover its widening current account gap. EU Monetary Affairs Commissioner Joaquin Almunia today said he needs to discuss the matter with the Romanian government and the IMF.

“We will need to establish a list of conditions to send the financial support needed,” Almunia said after a meeting of euro- area finance ministers in Brussels. “I cannot anticipate any size of thee financial needs.”

Neither Pogea nor Basescu said how much the country may need to borrow, although central-bank adviser Eugen Radulescu said last month the country needs 10 billion euros ($13 billion) in external financing.

Eastern Europe is set to slide into a recession, the IMF said on Jan. 29. Hungary, Ukraine, Belarus, Latvia and Serbia already have been provided more than $35 billion in financing to prevent defaults and aid banks.

To contact the reporter on this story: Adam Brown in Bucharest at abrown23@bloomberg.net

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