Tuesday, March 17, 2009

Romania's aid package may reach 19 bln euros-source

BUCHAREST, March 17 (Reuters) - A potential aid package for Romania to help patch up finances strained by the global crisis and calm nervous markets could total 19 billion euros ($24.68 billion), a source close to the talks said on Tuesday.

Romania has approached the European Union and the International Monetary Fund for economic support which would make it the third member of the bloc to seek outside help to weather the global financial crisis, after Hungary and Latvia.

An IMF mission arrived in Bucharest last week to hold loan talks and it is due to leave town later this month. Government sources have said an official announcement may be expected next week.

Several members of the centre-left government in charge of handling loan talks, will meet on Tuesday after reports in the local media that the IMF mission met with Romanian President Traian Basescu and Prime Minister Emil Boc.

"As far as I know, it's 19 billion euros," a source close to the talks told Reuters about the figure, which includes cash from the EU, the IMF and other financial institutions.

"But the talks going on now are about macroeconomics, not the number."

The central bank's chief economist said last Thursday that financial aid package for Romania could fall in a range close to 7.4 billion to 16 billion euros, or its expected 2009 financing gap.

Analysts have estimated the amount could be around 20 billion euros, about the same amount as Hungary's $25 billion deal agreed last year.

Since the 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 debts and budget deficits fanned external imbalances.

An aid package should help underpin market sentiment, shaken by foreign investors' concerns that Romania may run out of money to finance debt and trade, economists said. (Reporting by Justyna Pawlak and Luiza Ilie; Editing by Andy Bruce)

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