Romania can choose: an IMF loan or state bonds

Romania could need immediate financing to cover deficits, in case it slides into recession. A possible financing source is internal loan, which is the most at hand and would give the impression that individuals contribute to the overcoming of the crisis. However, this could not be sufficient, so an international loan might be required.

The government expects Romania's economy to rise 2.5 percent, and foresees no decline in tax collection. Thus, the budget announced last week by Prime Minister Emil Boc will be confirmed in three months. On the other hand, the International Monetary Fund (IMF) forecasts that Romania will slide into recession, in which case the country will need immediate financing to cover deficits.

Although government and IMF officials did not provide details referring to the possibility of a loan, the Governor of the National Bank of Romania (BNR), Mugur Isarescu, admitted that talks regarding this matter do exist. BNR hopes for a smooth landing, with 2.2-2.3 percent economic growth, but does not rule out the risk of recession, while IMF sees a one percent decline in gross domestic product (GDP) this year, without excluding a scenario of growth.

Regarding the interest rates of an IMF loan, analysts interviewed by Business Standard forward figures between 3-7 percent annually, depending on the borrowed amount, €7 billion or more.

"If we took out a loan on international markets, I do not think we would benefit from an interest below 10-12 percent. If we took out a loan from IMF, the interest rate would be lower, at least half this level," the President of the Group of Applied Economics (GEA), Liviu Voinea, said.

Business Standard