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Ponta: Next IMF accord of 3-5 billion euro in the fall

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Romania will sign a new preventive accord of 3-5 billion euro with IMF and EU before this fall, with fewer conditions than the previous accords, premier Victor Ponta declared according to Mediafax. Ponta said, in an interview granted in Bucharest to Bloomberg agency, that the new accord will help reduce financing costs and will support national currency.

 

The terms of the new accord will concentrate on consolidating state companies and maintaining fiscal discipline, the premier added.“There will be an improved accord… We will not have a very detailed accord like the past ones,” Ponta declared.He added that the drop of the Romanian state’s financing costs will continue after the conclusion of the new accord with IMF and BNR will probably reduce the monetary policy interest rate, which is now at a record low level of 5%.“The biggest challenge for Romania now is financing, considering the fact that banks are more restrictive,” the Romanian official said.

 

An IMF mission is in Bucharest for talks about a new loan accord with Romania. The authorities had declared they wanted a new accord to be concluded for two years.

 

The next accord with Romania, a preventive accord, will be meant to consolidate macro economy and make structural reforms and will suppose privatization and restructuring of certain state companies, the general director of IMF, Christine Lagarde declared in Bucharest on Tuesday. The IMF Board of Directors approved, with three exceptions, the latest evaluations of the accord with Romania at the end of June. The 5 billion euro accord between Romania and IMF and EU was considered preventive by Romanian authorities, after a stand-by accord of 13 billion euro signed in 2009 and concluded in 2011.

The last accord was signed in 2011, as a continuation of the accord initiated in 2009 and which should end in 2013. The IMF Board approved in March the request of the Romanian authorities to extend the accord by 3 months, until the end of June, so that the government could have time to reduce arrears and adopt measures of better management of state companies.

 

We did not ask exemptions from IMF, we just fulfilled prior actions

 

Premier Victor Ponta rejected on Thursday the idea that the government had requested exemptions from IMF for failed performance criteria, and said the letter addressed to IMF referred to parameters not to “prior actions.” We did not ask any exemptions. I talked about prior actions which we have fulfilled. It’s hard to understand each other when we do not use the same terms. We had prior actions which were fulfilled. The others are not government indicators,” Ponta said after participating in a conference devoted to small and medium companies.

 

He said the letter of intention addressed to IMF, signed by the finance minister and the BNR governor referred to parameters. “ I repeat, prior actions which were the reduction of arrears, privatization of CFR Marfa, listing Transgaz, have been fulfilled. Otherwise the accord could not be concluded successfully,” Ponta said. According to him, listing Transgaz was according to schedule.

 

(Please read Romania: Letter of Intent, Memorandum of Economic and Financial Policies, and Technical Memorandum of Understanding, June 10, 2013 http://www.imf.org/External/NP/LOI/2013/ROU/061013.pdf)

 

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