Vladescu: Romania needs 20 billion euros from IMF or EUPublish date: 16-12-2008
The drastic decline in foreign financing along with the slowdown of the economy that is already affecting the revenues of the state budget are bringing up the issue of Romania's signing of an agreement of financial support with either the IMF, the European Commission or the European Central Bank, in order to at least improve the sovereign risk perception.
More and more voices are talking about the need to sign an agreement with the Fund, even though there is no stringent need of money, at least not for the time being.
Sebastian Vladescu, former finance minister say that Romania would need up to 20 billion euros from the European Commission, the European Central Bank or the IMF.
"I considered the financing needs for the next two or three years. The exact amount will have to be set by the future government," Vladescu says without detailing the 2009 budget deficit he took into account. He explains, however, that an 8-9% GDP deficit scenario would be really exaggerated.
In November, the deficit leapt to almost 3% of GDP, with most analysts anticipating about 4% for the end of the year. The 2009 budget that the new government will prepare remains to be seen.
At the same time, the foreign deficit rose to 14.4 billion euros in October, and is 11% higher than after ten months of 2007.
An agreement with the IMF entails, first of all, the explicit commitment of the government to curb the budget deficit, with the Fund insisting for a deficit of less than 1% of GDP achieved by rationing public spending, in order to balance the foreign deficit that is considered unsustainable. At the same time, it might demand tax increases to consolidate the dwindling budgetary revenues.
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