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September 24, 2021

‘Zero degree’ meeting at BNR prior to new IMF Board meeting

Romanian President, PM, finance minister and central bank governor yesterday decided on the parameters of a new agreement with the IMF, EU and WB, which could stand at EUR 3.6 bln, sources said. The money will be accessed only in case of emergency.

President Traian Basescu, PM Emil Boc, Finance Minister Gheorghe Ialomitianu and BNR Governor Mugur Isarescu agreed on the parameters of a new precautionary loan agreement with the European Union and the International Monetary Fund. The participants in the working meeting looked at the state of play in the implementation of the foreign financing agreements in place with the financial institutions. The meeting at BNR started at 11h00 and closed at about 12h30.

‘In the context, it was highlighted the fact that, in order for economic growth to be resumed on a healthy basis, it is essential to continue fiscal consolidation and structural reforms, so that the implementation of medium-term objectives can ensure a sustainable process of nominal and actual convergence with the European Union,’a BNR release reads.

The meeting has been held in the context where the IMF Executive Board is set to discuss today the sixth report on the fulfilment by Romania of conditions established under the stand-by agreement. If the Board approves the report, Romania will receive the seventh instalment worth DTS 769 (EUR 0.9 bln) of the eight-instalment loan contracted under the agreement with the IMF in May 2009. “The most recent calculations show that the sum that the IMF will earmark for the new agreement with Romania stands at EUR 3.6 bln. The money will be accessed only in case of emergency,” sources stated for Mediafax.

Nevertheless the state will pay a commitment fee of 0.3 per cent per year even if the money is not used. The amount may be modified in the following months, depending on economic developments and the need for state funding. Romanian authorities lean towards signing only a one-year agreement with the Fund, the main reason being the fact that Parliamentary elections will take place in 2012. Mihai Tanasescu has recently told ‘Evenimentul Zilei’ daily that the report would be accepted and Romania would sign a new agreement with the Fund in March or April. Asked if the value of the new agreement would indeed be EUR 5-6 bln as the word goes, Mihai Tanasescu said ‘it will be less than that’.

In the spring of 2009, Romania concluded a two-year agreement on a financial package with the IMF, European Union and the World Bank, worth approximately EUR 20 bln.

The Romanian president attends such working meetings organised by important institutions at every beginning of a new year.

A day before, President Traian Basescu was saying he supported the signing of a new precautionary agreement between Romania and the IMF, the major objective of which would be fiscal consolidation.
The supporting pillars of the new agreement with the IMF should be fiscal consolidation, a simplified fiscal system, the use of EU funds and a flexible labour market, the head of state said on Wednesday.

Hotnews.ro quotes sources close to the talks as saying the four officials also discussed ways of financing the 2011 budget deficit, the possibility of issuing Eurobonds on the international markets, technical details on the performance-based remuneration of specific social and professional categories and the risks identified by BNR in the evolution of Romania this year should the reforming process come to a halt.

Another topic was how to make the absorption of European funds more flexible – an essential element in the financing of large-scale projects. ‘The request was made by the president, but the meeting took place at the headquarters of the National Bank of Romania, because all the data regarding the economy is there and it was easier to discuss on that than for them to carry all the paperwork to Cotroceni or to us, at the Government,’ government sources also told HotNews. According to them, the PM also wanted to know the central bank’s opinion on signing a new agreement with the international financiers, as well as BNR’s scenarios for this year.

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