Romania's new deal with IMF, under EUR 13 billion, fund says

Romania’s upcoming agreement with the International Monetary Fund will “certainly” be lower than its current EUR 13 billion deal, IMF mission head Jeffrey Franks (in picture, right) said Wednesday, adding that the financing program will most likely be a precautionary one. However, the exact figure will be set after discussions with the Romanian government, Franks told MEDIAFAX. Romania and the IMF last year signed a EUR12.95 billion two-year standby agreement, as part of a larger EUR19.95 billion package which includes funds from the EU, the World Bank and other foreign lenders. Romanian President Traian Basescu said recently that the country plans to enter a new loan agreement with the fund after the current one will end in May 2011. According to Franks, a precautionary standby arrangement would be like an insurance policy against unforeseen events and Romania wouldn't need to draw funds from the IMF unless something unexpected happens, such as a regional crisis that could put pressure on the leu's exchange rate. Franks didn't rule out the possibility that Romania might use part of the new funds to finance its budget deficit, just like it did during its current financing program. The new agreement would include additional reforms that would help Romanian economy return to its pre-crisis growth potential, Franks said, adding that lowering the budget gap to below 3% of the gross domestic product is among the most important actions included in the program. Mediafax