Romania and the IMF have signed a two-year EUR3.6 billion loan agreement in 2011, successor to a larger EUR13 billion deal secured in 2009. The deal is supplemented by a EUR1.4 billion loan from the EU and another EUR1 billion from the World Bank.
Romanian authorities are treating the agreement as precautionary and do not intend to draw under it.
Completion of the reviews makes an additional amount equivalent to 450.6 million special drawing rights (about EUR520.74 million), available for disbursement, bringing the total resources currently available to Romania under the stand-by agreement to an amount equivalent to 3,090.6 million special drawing rights (about EUR3,571.68 million), according to the IMF.
“Romania has successfully concluded the second of two stand-by arrangements with the Fund. The economy has stabilized. Core inflation remains low, and the fiscal and current account balances are sustainable. However, growth is weak and downside risks exist. Structural reforms are critical to realizing Romania’s growth potential and creating jobs, while continued fiscal discipline is essential to anchor macroeconomic stability,” Nemat Shafik, IMF deputy managing director, said.
In completing the reviews, the Executive Board approved three waivers for the nonobservance of the performance criteria on net foreign assets of the National Bank of Romania, the general government balance, and the central government arrears, based on corrective actions taken by the authorities, reads the press release.
Romanian Prime Minister Victor Ponta Wednesday said the government has resolved all remaining issues under the EUR3.6 billion loan agreement with the International Monetary Fund and the program should be completed successfully.
“We meet all the criteria included in the program. We have resolved the issues regarding Transgaz’s listing, as well as the ones concerning the local and central arrears and the privatization of CFR Marfa,” Ponta said.
The program was initially due for completion in April this year, but the government has requested a three-month extension to meet a series of IMF requirements, including the privatization of state-run freight rail company CFR Marfa.
The cancelation of government arrears, particularly at the level of the local authorities, has been another sensitive issue during the program, after the government has failed to observe the deadlines set by the international financier.
A positive review of Romania’s program could open the way for a new agreement with the international institution.