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| IMF APPROVES LOAN AGREEMENT WITH ROMANIA 05/05/2009 |
| (2009-05-05) |
| Last updated: 2009-05-06 17:33 EET |
After Hungary and Latvia, Romania becomes the third EU member country to borrow money from the International Monetary Fund in order to buffer the effects of the global economic crisis. The international financial institution’s board of directors announced on Monday that it approved Bucharest’s application for a 12.9 million Euro loan. The first installment, worth 5 million Euros, is immediately available. Romania’s IMF representative, Mihai Tanasescu:
“This money will be exclusively channeled into the forex reserve of the National Bank. This first installment is intended to strengthen the central bank’s international reserve, and implicitly the currency exchange rate in the forthcoming period. The next installments will be released after discussions between the Romanian authorities and the IMF. Every six months, the programme will be updated, so as to enable the IMF board to approve the next installments over the next 24 months of the agreement with Romania.”
Intended to stabilise medium and long-term policies, both in the field of financial markets and of the structural reforms in Romania, this stand-by arrangement will also contribute to the financial stabilisation of neighbouring states, says Mihai Tanasescu:
“In my opinion, this agreement is one of the major signals that Romania may convey to financial markets. It stabilises Romania’s medium and long-term policies in the fiscal and financial markets, and the structural reform policies. The arrangement once again indicates that Romania’s precautionary attitude is highly appreciated, and it will play an important part in the region. This is why I believe this arrangement is critical to the future fiscal consolidation and to Romania’s regaining the confidence of investors.”
The agreement is designed to reduce public deficits, to preserve the capital of banks and cash flows in the financial markets, to reduce the inflation rate, to secure foreign funding and strengthen the confidence in the Romanian economy. These objectives are particularly important considering that 2009 and 2010 will be difficult years for Romania, according to Jeffrey Franks, the head of the IMF mission that negociated the agreement. IMF estimates Romania’s unemployment rate will go up from 4% in 2008 to 8.9 % this year, and decrease to 7.7% only in 2011. As for the economic growth rate, the IMF expects a 4.1% drop this year, followed by a slight recovery of demand in local market. However, the economy will see a standstill in 2010, before we can expect a 5% rise in 2011.
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2025-04-03
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