IMF Board to discuss Report on Romania, on February 19

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International Monetary Fund (IMF) Board of Governors will discuss on February 19 the Evaluation report on the fulfillment of provisions of the Stand-By Agreement with Romania, following which the third and the fourth loan tranches could be transferred, in value of 2.3 billion euros, according to an information released on Friday on the IMF site.

In case the latest assessment report on Romania’s progress under the loan agreement, drafted by the mission headed by Jeffrey Franks, visiting Bucharest on Jan. 20 through 27, is approved two new aid tranches – the third and the fourth – will be released, in the total value of 2.3 billion euros.

On the occasion of the press conference given in Bucharest, Jeffrey Franks said he was satisfied by the result of the analysis and talks with the Romanian authorities, underlining he was going to recommend to the Board the conclusion of the assessment report and, implicitly, the disbursement of the two tranches.

Half of the 2.3 billion euros will go to Romania’s National Bank for the consolidation of its foreign currency reserve and half into the accounts of the Ministry of Public Finance, for balancing the budget deficit.
The agreement signed by Romania and IMF last year, in May, stipulated the disbursement of a loan in the total value of 12.9 billion euros, divided into eight tranches. So far, Romania was transferred the first two tranches from IMF in total value of 6.9 billion euros, as well as 1.5 billion euros from the five-billion euros loan given by the European Union.

The EU is expected to transfer to Romania the second tranche, in the value of one billion euros. Finance Minister Sebastian Vladescu stated lately that in the summer Romania could opt for a new type of agreement with IMF, a Precautionary Stand-By.
Mihai Tanasescu, senior advisor with the International Monetary Fund, told that “the discussion about the transition to a Precautionary-type agreement is a little premature and we might assess such a decision in April or May 2010, when the next IMF mission is due in Bucharest. This goal requires to be carefully examined in the general context.

In case a decision is made to replace the Stand-by with the Precautionary Stand-by Agreement, this would send a highly positive signal, given that Romania is to continue its reforms under an IMF program and will also prove that it has overcome a difficult moment and can secure financing on its own from the domestic and foreign markets. At the same time, such a decision would show that Romania has a very firm commitment towards continuing reforms”.

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