Tuesday, June 29, 2010

IMF may delay Romania talks until early July

BUCHAREST, June 28 (Reuters) - The board of the International Monetary Fund might delay talks on Romania's 20 billion euros aid package until early July, the country's representative to the Fund was quoted on Monday as saying.

The centrist coalition government plans to raise value-added tax by 5 percentage points to 24 percent on July 1 and said at the weekend the IMF Board would discuss its 20 billion euros aid deal on June 30 and release aid by July 2.

But Romania's representative to the Fund, Mihai Tanasescu, said there was a possibility that the board may delay talks on Romania until early July.

"There is a possibility that the IMF Board will discuss the report on Romania on Wednesday, but it is only a possibility because there are some rules on how documents circulate within the IMF," news agency Agerpres quoted Tanasescu as saying.

"To catch Wednesday's board meeting ... we must follow all these requirements, which will be very complicated, but we will try to do everything possible."

The VAT hike, which replaces a planned cut in pensions which the country's top court rejected, should lead the IMF to approve disbursement of around 2 billion euros ($2.68 billion) in IMF and European Commission funds, Prime Minister Emil Boc has said.

The VAT rise hit the currency and stocks in early trade on Monday, analysts and dealers said.

"In the current context, the IMF executive board might want to wait for another review to take place in July before disbursing," BNP Paribas analysts said in a note.

By 0730 GMT, the blue-chip BET index had fallen 3.2 percent to 4,732 points .BETI and the leu EURRON= dropped 0.3 percent to 4.289 per euro.

"The short term impact is that IMF disbursement is not so sure anymore, even though Romania's Finance Minister stated the disbursement is to come on 1 or 2 July," said Nicolaie Alexandru-Chidesciuc, ING Bank Romania's chief economist. (Reporting by Luiza Ilie and Sam Cage; Editing by Mike Peacock)

No comments: