Associated Press, 06/23/2009
BRUSSELS -- The European Union said Tuesday it will next month pay Romania euro1.5 billion in the first part of a bailout package after the country agreed to curb public spending and make financial reforms.
EU nations have promised Romania a euro5 billion loan as part of a euro20 billion bailout led by the International Monetary Fund, the World Bank and the European Bank for Reconstruction and Development.
The EU's executive commission said Romania has now agreed terms for the payment that call on the government to do more to balance its books, reform its economy and introduce new financial sector rules and oversight.
The EU will raise the money for the seven-year loan by selling bonds and will hand over the money in five installments. It has already given Hungary and Latvia euro9.6 billion in similar bailouts from a crisis fund for the 11 member nations that don't use the euro.
EU officials forecast that Romania's economy will contract by 4 percent this year and not grow at all next year.