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September 25, 2020

Basescu wants IMF money to reach the state budget

Romanian President Traian Basescu, Finance Minister Gheorghe Pogea and the presidential adviser for economic policies, Bogdan Teodoriu yesterday met the delegation of the International Monetary Fund (IMF), led by Jeffrey Franks, to discuss the possibility of directing the second installment of the loan taken by Romania toward the state budget, rather than the Central Bank (BNR), as it was decided initially.

“We’ll have to see in what measure we can obtain from the IMF the right to direct the second loan installment toward the state budget, instead of BNR,” Basescu said, adding that he will approach this matter with the IMF envoys on Thursday, at the Cotroceni Palace. According to the president, the resource obtained from the second installment of the loan might be used to cover the budget deficit, but also to finance investments in the health and education sectors. Based on existing evaluations, this year’s budget deficit will stand near 8-8.5 pc, said Basescu, adding that, in return, the Fund might ask Romania to make an effort and curb the deficit to 7 or 7.2 pc.

BNR talks “at technical level” about the possibility of using the second installment of the IMF loan to cover the budget deficit, yesterday announced Central Bank Governor Mugur Isarescu, who considers this move could help to economic recovery.

“Eventually, the money from the IMF will go to BNR anyway. If the Finance Ministry spends this installment in the country, it will sell the foreign currency to BNR against lei, and the foreign currency will enter the reserve. If the Finance Ministry uses the money abroad, this will relieve BNR from making certain foreign payments,” Isarescu told a press conference held for the presentation of the quarterly report on inflation. The IMF delegation had also meetings with parties’ representatives (PSD and PNL).

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