“Signing a new agreement with the IMF is a good thing, and it doesn’t have to be a new precautionary credit line. After having worked so well with the IMF and the EU for all these years, I believe Romania can move on to the next level and sign a new type of agreement with the IMF,” Mihai Tanasescu said in an interview for RFI radio station.
Romania’s Finance Minister Florin Georgescu last week said the country plans to seek a new precautionary credit line from the IMF for the 2013-2015 period when the existing one ends in April next year. The official added it was too early to say how much Romania plans to borrow.
According to Tanasescu, entering a flexible credit line agreement is a step up from a precautionary loan, as the second arrangement includes a different set of terms, including longer periods between review missions and “broader” economic and financial targets.
Set up with a view to reduce the perceived stigma of borrowing from the IMF, the flexible credit line is a renewable credit line that provides qualified countries with large and up-front access to IMF resources.
The facility was designed to meet the increased demand for crisis-prevention and crisis-mitigation lending from countries with robust policy frameworks and very strong track records in economic performance, IMF data show.
Three countries have accessed the facility so far, namely Poland, Mexico and Colombia, but they haven’t drawn any funds.
In April 2011, Romania and the IMF signed a EUR3.6 billion loan agreement, a successor to a larger EUR20 billion international bailout package received during 2009-2011.
The new agreement is supplemented by a EUR1.4 billion loan from the European Commission and another EUR1 billion from the World Bank. So far, the authorities in Bucharest have not drawn any funds.
Joint teams from the IMF, the EU and the World Bank are due to arrive in Bucharest today for the sixth review of the loan agreement.