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FinMin ponders seeking “unconditioned financing” from IMF, EBRD

Romania’s Ministry of Finance intends to first tap the local market for financing, them rely on the International Monetary Fund (IMF) and the European Bank for Reconstruction and Development  (EBRD) - but under arrangement not including conditions [such as structural reforms or performance targets], for collecting the money needed to finance the fight against the new coronavirus (Covid-19) pandemic, finance minister Florin Citu told Bloomberg.

The international market remains the solution of last resort, he said. But “if we identify an opportunity in international markets, we will take advantage of it,” he added.

The budget deficit will reach over 6% of GDP this year due to the pandemic (from 3.6% initially projected), minister Citu estimated on a rather optimistic note - also adding that he remains confident in quick economic recovery.

“The greatest concern [of the Government] is to make sure that people receive their salaries, pensions and unemployment benefits on time,” the Romanian finance minister told Bloomberg on Monday, March 30.

The Government has financial resources, mainly its foreign exchange reserve, for several months and is currently analyzing the options to secure further financing, in the context that the public deficit would exceed 6% this year, as a result of unexpected expenses related to the health system, but also due to measures for supporting the companies and the population, Florin Citu explained.

Minister Citu also said that rating agencies are not expected to immediately downgrade Romania, because the economic shock related to the virus is an exceptional one, and the Government remains committed to fiscal consolidation.