Monday, January 30, 2012

World Bank in Talks With Romania on EU1 Billion Credit Line

By Andra Timu

Jan. 26 (Bloomberg) -- Romania and the World Bank are in talks over a 1 billion-euro ($1.3 billion) credit line to support the Balkan nation’s budget, the bank’s country manager Francois Rantrua said.

Prime Minister Emil Boc’s government, which is carrying out an austerity program, is negotiating with the Washington-based lender the terms of the precautionary accord, which will let it to decide at a later stage whether to draw from the funds or not, Rantrua said in an interview in Bucharest today.

The World Bank will join the International Monetary Fund and the European Union in a precautionary agreement with Romania, signed in March, once the credit line is approved. The IMF and the EU set aside 5 billion euros for the government to access on in case of market turmoil. Romania hasn’t drawn any money so far.

“Romania will have to meet certain mutually agreed measures, which are currently being discussed,” Rantrua said. “The duration of the credit line can be as long as three years.”

The bank completed disbursement in December of another 1 billion-euro loan to Romania as part of a 20 billion-euro international bailout, which was signed in 2009 and ended in May 2011.

Romania needs the World Bank’s “guidance on policies and reforming the state,” Finance Minister Gheorghe Ialomitianu said on Dec. 27.

Boc’s cabinet pledged to cut the budget deficit to 1.9 percent of gross domestic product this year from 4.4 percent of GDP in 2011.

--Editors: Elizabeth Konstantinova, Zoe Schneeweiss

To contact the reporter on this story: 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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