Friday, January 7, 2011

Romanian Officials Set Parameters for Potential IMF-EU Precautionary Loan

Romania said it set parameters for a new precautionary loan from the International Monetary Fund and the European Union as the Balkan nation emerges from a recession.

The central bank in Bucharest gave no details of the parameters in a statement today, saying that fiscal consolidation and “structural reforms” are “essential” for economic growth. The credit line may be about 3.6 billion euros ($4.7 billion) and tapped in case of an emergency, Mediafax newswire reported, citing unidentified government officials.

“It’s just speculation and concrete discussions on the amount will take place during the next review mission which starts on Jan. 25,” IMF Mission Chief to Romania Jeffrey Franks said in a phone interview from Washington today.

Romania, which has been relying on a 20 billion-euro bailout led by the IMF to stay afloat, may take a precautionary loan from the Washington-based lender in April to strengthen its credibility, streamline the fiscal system and help absorb EU funds worth as much as 32 billion euros available through 2013, President Traian Basescu said yesterday.

Romanian central bank Governor Mugur Isarescu, Basescu, Prime Minister Emil Boc and Finance Minister Gheorghe Ialomitianu met in Bucharest today without disclosing details about any potential new credit. Basescu is scheduled to speak on state television at 9 p.m. in Bucharest.

The government will probably seek a one-year precautionary loan after the current two-year bailout agreement expires in May because of general elections in 2012, Bucharest-basedMediafax said.

Boc’s government won parliament’s approval for the 2011 budget and key wage and pension legislation before a Dec. 31 deadline to qualify for the next disbursement of 900 million euros from its current loan secured in 2009.

The IMF’s board of directors will meet tomorrow to discuss the payment and another 1.5 billion euros from the EU and the World Bank through March.

To contact the reporters on this story: Irina Savu in Bucharest at isavu@bloomberg.net; Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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