Romania: Chance of Unblocking IMF Loan

Romania has an “extremely good” chance of unblocking a 20 billion euro International Monetary Fund, IMF, and European Commission led aid package, following Parliament’s adoption of an austerity package last week, central bank Vice Governor Cristian Popa said.

“The situation of political stability has been sorted out… The budget has been approved under the terms agreed with the European Commission and the IMF,” said Popa on Wednesday.

An IMF and European Commission team is currently beginning a seven-day visit to Bucharest during which they will assess whether the country has complied with the conditions for the loan agreed to last year. Key to those conditions was the passage of an austerity budget.

The budget foresees a reduction in the public deficit from 7.3 per cent of GDP in 2009 to 5.9 per cent. It also foresees a freeze in public sector salaries and pensions, as well as plans to lay off some 100,000 public employees.

The IMF and European Commission agreed to freeze further disbursements of aid following the government’s collapse in November. Since then, a new government headed by Prime Minister Emil Boc was formed.

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