The bank expects Romania will use the upcoming visit of IMF’s chief Christine Lagarde to announce a new standby agreement with the international institution.
“We think that the authorities will use this opportunity to announce a new precautionary stand-by arrangement with the IMF, covering two years and aimed at restructuring state-owned enterprises,” Erste said in its report.
“Bearing in mind that the combined repayments of the central bank and the finance ministry to the IMF peak in 2013-14 at EUR5 billion a year and privatization of public companies in energy and transport is at an incipient stage, a new deal without drawing funds from the IMF is a good strategy.”
The Austrian lender added that a new deal with the IMF would also pave the way for additional rate cuts from the central bank, mitigating the risks for a strong depreciation of the national currency.
Romanian Prime Minister Victor Ponta said Thursday that the government would start this month negotiations with the IMF and the EU with a view to secure a new precautionary loan arrangement, following the successful completion of a EUR3.6 billion two-year program in June.
He said a letter of intent has been already sent to the European Commission.
IMF’s chief Christine Lagarde will visit Bucharest on July 15-16, where she is expected to deliver a speech on Romania and eastern Europe, “focusing on identifying a new growth paradigm for the region,” the IMF said in a statement Tuesday.
The IMF’s board last week announced the European country has successfully concluded its second loan program with the international institution, making an additional amount of EUR520.7 million available for disbursement.
Romania and the IMF have signed a two-year EUR3.6 billion loan agreement in 2011, following the completion of a larger EUR13 billion deal secured in 2009. The agreement was supplemented by a EUR1.4 billion loan from the European Union and another EUR1 billion from the World Bank. The country has not drawn any funds under the second program.