Romanian Finance minister: Hopes for Romania to shift to a precautionary IMF agreement

Romanian Finance Minister Sebastian Vladescu hopes that Romania can shift from a stand-by loan agreement to a precautionary agreement with the IMF in the near future. This would indicate that the Romanian economy has recovered, according to Romanian news agency Mediafax.

„It is too early to tell if we’ll change the agreement after the next evaluation. We hope to shift to a precautionary agreement, because this would mean the global economy is recovering and that the Romanian economy has recovered”, Sebastian Vladescu declared.

Romanian National Bank (BNR) chief economist Valentin Lazea told HotNews.ro that shifting to a precautionary type of agreement, like Hungary did, will let markets know that Romania can handle the situation on its own.

A „precautionary” agreement is different from a „stand-by” agreement in that it doesn’t need to use the money featured in the agreement, unless there is an emergency, although it sets-up for the subscribed country similar economic engagements.

Romania has a two-year loan agreement with the IMF, worth of 12.95 billion euros. The total foreign finance package involves not only the IMF, but also the World Bank and the European Bank for Reconstruction and Development (EBDR) and a total sum of 19.95 billion euros.

In the beginning of May 2009, the IMF swerved the first loan instalment, approximately 4.8 billion euros, which went into the BNR reserve. In September, Romania received the second instalment – 1.85 billion euros – out of which half went to BNR and half to the state’s Treasury held by BNR. Romania will receive the third and the fourth IMF instalments by the end of February, worth of a total 2.3 billion euros.

BNR vice-governor Cristian Popa spoke recently about the possibility to see Romania getting less than the total sum agreed by the finance agreements.