Romania Should Borrow Over EUR10 Billion

Romania could conclude a deal with the International Monetary Fund by the end of April. The deal should be valid through 2010 and the financing package from the European Union and the other international financial institutions should be larger than EUR10 billion, analysts said Monday.

An IMF mission, led by Jeffrey Franks, will visit Bucharest during March 11-25, following up on the ongoing economic dialogue with the Romanian authorities, according to a release from IMF.
 
"Preliminary discussions in Washington last week were fruitful, and we remain in close dialogue with the Romanian authorities and the European Union to evaluate appropriate responses, including possible technical and financial support," IMF said.
 
"The negotiations will not be over soon. The process can take one or two months. By the end of April we will probably have an agreement, but this is different than in Hungary's case; we will mostly follow standard procedure," said ING Bank Romania economist Nicolaie Chidesciuc.
 
Chidesciuc said that the financing package could be worth a total of EUR10 billion.
 
Raiffeisen Bank chief economist Ionut Dumtru predicted a higher value. He said a EUR12 billion - EUR13 billion is a comfortable funding. According to Dumitru, the only way the agreement can be concluded by the end of April is if the two parties reach a consensus on budgetary constructions principles and methods.
BRD-Groupe Societe General chief economist Florian Libocor said an exclusive monitoring agreement with the IMF (with no financial component) is likely to stretch for up to three years.
 
"I think Romania can manage the situation with EUR5 billion to EUR7 billion and the support package's financial component will be backed by European financial institutions, with more international financial institutions such as the IMF and the World Bank guaranteeing this package through the monitoring component," Libocor said.
 
On the other hand, RBS economist Catalina Constantinescu said Romania will need as much as EUR15 billion in financing, although she admits that any amount over EUR10 billion significantly restricts financial problems and the pressure on the exchange rate.

Mediafax