Connect with us

Hi, what are you looking for?

Capital Business
Capital Business

World

Romania starts talks with EU, IMF on loan

BUCHARAEST, March 11 – Romanian officials on Tuesday began talks with European Union and International Monetary Fund representatives on a loan that analysts said could be worth up to 26 billion dollars (20 billion euros).

"The size of the loan is under consideration," the Romanian finance ministry said. Analysts in recent days have said the credit could amount to between 6.0 and 26 billion dollars.

Government sources cited by the Mediafax news agency have said Romania could borrow 15 billion dollars from the IMF and another 9.0 billion dollars from the European Union.

"The amount will be determined during the course of the negotiations and not before their start," a government source told AFP.

Mihai Tanasescu, Romania\’s representative at the IMF, said outcome of the talks would become known "within 10 days."

The finance ministry added: "An international credit as well as measures adopted by the authorities will help to strengthen financial stability in the medium term, rejuvenate the business climate and re-gain investor confidence."

The ministry said the planned loan was necessary to "avoid a deterioration in macroeconomic stability and to ensure the establishment of a protective umbrella" in response to the economic crisis.

At London-based Capital Economics research group analyst Neil Shearing said that while a loan for Romania "should calm fears of an immediate meltdown and could lead to a near-term bounce in Romanian markets, it does not remove the need for a fundamental depreciation in the leu," the national currency.

"Moreover it will not prevent Romania from entering a deep recession this year."
He noted that IMF loans come "with strings attached, usually in the form of a commitment to fiscal retrenchment."

Advertisement. Scroll to continue reading.

He said a bailout package would not enable Romania to "revert to its recent pattern of development."

"Rapid growth has been driven by an unsustainable credit binge, funded by borrowing from abroad. This is the root of the country\’s problems."

Romania\’s parliament last month adopted an austerity budget for 2009 that freezes public sector pay and allocates billions of dollars for investments in infrastructure to boost the struggling economy.

The plan foresees economic growth at 2.5 percent in 2009 and a public deficit of 2.0 percent of gross domestic product.

The finance ministry foresees growth of less than 1.0 percent in the first three months of this year, sharply slower than the 8.2 percent recorded in the same period last year.

Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...