Loan from IMF, a preventive move as Romania is not in desperate need of money, premier saysPublish date: 23-03-2009
The loan Romania would contract from the International Monetary Fund (IMF) and other European institutions is a preventive move aimed at consolidating the central bank's reserves and supporting the weaker leu in a bid to resume lending, premier Emil Boc said.
Romania could take 13 billion euros, of the 18 billion euro loan from the IMF while the rest of the money will be borrowed from the European Commission, the World Bank or other financial institutions, people close to the negotiations told NewsIn last week. So far, people involved in the talks say authorities will not be forced the raise any taxes or take unfriendly social measures.
"Inking such an accord aims at fencing the negative effects of the crisis," the premier said, explaining the country is in talks for a credit with the IMF, the World Bank, the European Investment Bank and the European Bank for Reconstruction and Development.
Romania is not in a desperate need of money, Boc said, but it will borrow some money to fight the effects of the economic downturn already affecting large sectors of the industry.
The credit will be used to consolidate the central lender's reserves, prop up the leu and resume lending, he added. Authorities are in talks with mother banks to have them allow local branches to keep the money they get from the loan and maintain credit lines.
Another part of the money will go to banks to help them finance small and medium-sized companies, Boc added.
Transportation minister Radu Berceanu said yesterday that the value of the external credit stands at 19 billion euros.
However, no official sum was so far made public.
A mission of the IMF has arrived in Bucharest on March 11 and is currently assessing the economy and negotiating a financial aid for Romania, part of a multilateral financing package including the European Union and the World Bank.
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