Basescu: a foreign loan is a safety net for Romania

President Traian Basescu told lawmakers on Monday that Romania needs an external loan, which should be contracted in partnership with the International Monetary Fund (IMF), in accordance with EU regulations.

He added that the loan is not needed to support the state budget or state debts, but stressed that the country has a current account deficit and private sector foreign debt amounting to €24 billion this year.

A foreign loan "will make us stronger" in case of sharp depreciation of the international economic situation, he said.

Basescu added that the EU has some €30 billion available for new member states in 2009 and 2010, but that these funds cannot be accessed without an IMF partnership, given the European Commission lacks the means of controlling how these funds are spent.

Furthermore, he warned that Romania, and other countries in the region, will receive negative reviews from rating agencies, but a loan would be a "safety net." Basescu said that the current economic financial crisis is both a risk and an opportunity, and emphasized that reform should be the key in these times.

The President began his speech in Parliament by saying that Romania could become a modern and reformed state when the crisis is over.

Basescu said that Romania has 200 taxes and called on the Government to urgently try to help the business environment, including by changing the Fiscal Code, which is currently being debated.

On February 25, Basescu sent a letter to the Chairmen of the Chambers of Parliament, asking to address the plenary on March 9 on home politics issues. However, on March 5, during an official visit to Poland, he indicated that he would speak about ways to cover the current account deficit. He said that Parliament and the people must decide whether to declare "a time of austerity" and if Romania should take out an external loan to cope with the crisis.

Business Standard