Franks, IMF: Probability of Romania drawing IMF money in 2011, below 10%

Jeffrey Franks, the head of the International Monetary Fund (IMF) mission to Romania said that he believes the country should not draw money from the financial institution this year, while not entirely excluding this possibility. Franks, who has been meeting Romanian authorities in Bucharest during the last days, argued that the chances are less than 25 percent, or even below 10 percent, for Romania to require IMF money this year. Franks went on saying that in case some EU funded projects are not completed this year, Romania may return up to EUR 1.5 billion. He has also pointed out the need for additional measures from the authorities and new regulations to improve the absorption of EU funds. He said that the gas prices will be liberalized in stages, until 2013 for companies and from 2013 to 2015 for the population. According to Franks, the Romanian authorities will begin the sale of significant state energy companies such as Hidroelectrica, Nuclearelectrica, Romgaz, Trangaz, and others in the coming months. He also pointed that the Romanian National Bank (BNR) might need to adjust policies to achieve the inflation target next year, after the prices will rise this year by over 5 percent, while reducing the VAT and other taxes will only be possible on long-term. Experts from the International Monetary Fund and the European Commission reached an agreement with the Romanian authorities on economic policies regarding the new financial understanding, and the letter of intent will be discussed in the IMF board, probably in late June, according to Franks. The new preventive agreement with the IMF, signed at the end of March covers two years and has a value of around EUR 3.5 billion. Romania's previous agreement with the IMF was of around EUR 13 billion. Irina Popescu, irina.popescu@romania-insider.com