President to Ask Romanians to Tighten Belts

Romania’s President Traian Basescu will on Monday address Parliament in a key note speech in which he will say that the country is facing difficult times and make an appeal to Romanians for austerity measures.

“I will ask for support in getting a loan from the IMF or the European Union, but such a move must be supported by the people as no one can impose austerity measures if the population and the Parliament disagrees,” said Basescu on Friday.

Romania has already started preliminary discussions in Washington for a loan from the International Monetary Fund, IMF, to help patch up finances strained by the global economic crisis and calm nervous markets.

If Romania does take out a loan, it would be the next country in eastern Europe after Hungary, Latvia and Ukraine to receive international assistance. Economists say the country needs around 10 billion euros for short-term debt servicing and to cover public spending. The government has also already approached the EU over possible financial aid.

The Romanian leu fell to a record low against the euro in January and the stock exchange has lost 80 per cent of its value since the start of 2007.

Further declines in the national currency would put borrowers with hard currency debt under greater strain, putting yet further pressure on the economy. .
Romania’s economy is expected to slow to less than 2 per cent growth in 2009, down from last year’s
buoyant growth rates of between 8 and 9 per cent.

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