Money from EU to be used for investments, PM says

Publish date: 06-05-2009
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Prime Minister Emil Boc said Romania is going to inject the loan it had contracted with the European Union in investments, and not to discharge it in salaries and pensions.

'The money is for investments. We will distribute it today to investments in various fields, as scheduled in the state budget. And, let it be God's will too, we hope we will not be forced to change this strategy, at some point' the PM said.

He also explained the money borrowed from the EU will be used to protect the jobs for Romanians in the current economic crisis.

'The loan we had contracted with the European Union was meant to finance the country's budget deficit. Today, the budget deficit is for investments only and so we intend to keep it. As this funds were meant to save the Romanians' jobs, to create new jobs and to support massive public investments in infrastructure, transport and health,' PM Emil Boc said.

The Executive Board of the International Monetary Fund (IMF) also approved on Monday, unanimously, the stand-by agreement with Romania, for a period of two years, worth 12.95 billion euros.

Signing of the agreement with the IMF brings Romania immediate direct access to 4.37 billion euros SDR (special drawing rights), approx. 4.9 billion euros or 6.6 billion dollars, with the remaining to be accessible in tranches, after the quarterly evaluation, reads a release on the IMF Web page.

The IMF deputy managing director John Lipsky praised the Romanian authorities for 'asking for assistance in due time, so that to be able to correct the significant foreign imbalances and vulnerabilities in the latest years of economic boom, which left the country highly exposed to the international financial turmoil and to the volatility of the exchange rate.'

Moreover, the excessive public spending in the latest years led to an important fiscal deficit, which in the current conditions of tighter credit condition, is destabilizing. With the current economic crisis affecting Romania more and more, a rebalancing of the economy is inevitable, the IMF official said.

Romania concluded a two-year agreement with the IMF for 12.95 million euros, with the total foreign financing package, from the Fund, European Union, World Bank and the European Bank for Reconstruction and Development to reach 19.95 million euros.


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