Romania is poised to join the International Monetary Fund's growing list of European clients.
The IMF and local government officials have scheduled a Wednesday press conference in Bucharest together with local officials and counterparts from the European Commission, the World bank and the European Investment Bank to outline a financial-aid package worth around EUR19 billion. Two-thirds of the sum will come from the IMF in the form of a standby loan.
The IMF funds will go to bolster the central bank's reserves and its ability to manage local liquidity, while the other funds will be used to cover public financing and other needs, Mircea Geoana, head of the Social Democrat party, said Tuesday. His party is part of the coalition government and has until recently been opposed to the rescue scheme.
The actual letter of intent for the IMF loan is ready to be signed, according to President Traian Basescu's office.
However, the IMF plans to meet with executives from the parent companies of Romania's 10 largest foreign banks in Vienna on Thursday, so the actual signing may be put off for several days, they said.
Data Tuesday showed that Romanian private-sector lending contracted in real terms on the month in February, a sharp reversal of years of 50% annual growth rates. The speed of that slowdown underscores the need to lock in external funding guarantees as quickly as possible.
The IMF is showing an apparent willingness to tolerate a fairly high budget deficit of 4.6% of gross domestic product, according to Romanian officials.
The IMF is also assuming Romania's GDP will shrink by as much as 4% this year. Because the government's 2009 budget was built on a 2.5% growth forecast, fiscal action will be required.
http://www.djnewsplus.com/ge/article/SB123791304694814461.html?mod=s
The IMF and local government officials have scheduled a Wednesday press conference in Bucharest together with local officials and counterparts from the European Commission, the World bank and the European Investment Bank to outline a financial-aid package worth around EUR19 billion. Two-thirds of the sum will come from the IMF in the form of a standby loan.
The IMF funds will go to bolster the central bank's reserves and its ability to manage local liquidity, while the other funds will be used to cover public financing and other needs, Mircea Geoana, head of the Social Democrat party, said Tuesday. His party is part of the coalition government and has until recently been opposed to the rescue scheme.
The actual letter of intent for the IMF loan is ready to be signed, according to President Traian Basescu's office.
However, the IMF plans to meet with executives from the parent companies of Romania's 10 largest foreign banks in Vienna on Thursday, so the actual signing may be put off for several days, they said.
Data Tuesday showed that Romanian private-sector lending contracted in real terms on the month in February, a sharp reversal of years of 50% annual growth rates. The speed of that slowdown underscores the need to lock in external funding guarantees as quickly as possible.
The IMF is showing an apparent willingness to tolerate a fairly high budget deficit of 4.6% of gross domestic product, according to Romanian officials.
The IMF is also assuming Romania's GDP will shrink by as much as 4% this year. Because the government's 2009 budget was built on a 2.5% growth forecast, fiscal action will be required.
http://www.djnewsplus.com/ge/article/SB123791304694814461.html?mod=s