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Romania granted 20b-euro IMF loan
By Alison Mutler |
March 26, 2009, Thursday
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Print Edition
Print Edition
CRISIS-HIT Romania will receive 20 billion euros (US$26.89 billion) in rescue loans from a group of lenders led by the International Monetary Fund, officials said yesterday.
Jeffrey Franks, the head of a two-week IMF mission to Romania, told reporters that the IMF had agreed to a two-year bailout loan of 12.95 billion euros. The first portion - 5 billion euros 掳??? will be available in the summer.
Franks said another 5 billion euros will come from the European Union, 1.5 billion from the World Bank, and the rest from the European Bank for Reconstruction and Development.
Romania is the third EU member to receive an IMF-led bailout loan after Hungary and Latvia, having been hit hard by the economic crisis in recent months.
Prime Minister Emil Boc was expected to meet ministers late last night and approve the terms of the loan.
Franks said that as a condition of the loan, Boc's center-left government would take measures to gradually reduce the budget deficit.
The European Commission said in a statement that "a key element of the economic policy package is an immediate and sustained fiscal consolidation to limit the budget deficit to 5.1 percent of gross domestic product this year and to below 3 percent of the GDP in 2011."
The country's public finances have been stretched by the economic downturn, with lower revenues from income and corporate taxes as well as higher costs on social security for the jobless.
The financial system has also been strained as some international investors have pulled out their capital on fears about the stability of the country's economy.
Jeffrey Franks, the head of a two-week IMF mission to Romania, told reporters that the IMF had agreed to a two-year bailout loan of 12.95 billion euros. The first portion - 5 billion euros 掳??? will be available in the summer.
Franks said another 5 billion euros will come from the European Union, 1.5 billion from the World Bank, and the rest from the European Bank for Reconstruction and Development.
Romania is the third EU member to receive an IMF-led bailout loan after Hungary and Latvia, having been hit hard by the economic crisis in recent months.
Prime Minister Emil Boc was expected to meet ministers late last night and approve the terms of the loan.
Franks said that as a condition of the loan, Boc's center-left government would take measures to gradually reduce the budget deficit.
The European Commission said in a statement that "a key element of the economic policy package is an immediate and sustained fiscal consolidation to limit the budget deficit to 5.1 percent of gross domestic product this year and to below 3 percent of the GDP in 2011."
The country's public finances have been stretched by the economic downturn, with lower revenues from income and corporate taxes as well as higher costs on social security for the jobless.
The financial system has also been strained as some international investors have pulled out their capital on fears about the stability of the country's economy.
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