IMF, EC Put Off Loan Disbursements To Romania On Political Uncertainty

Franks said there is still time for the disbursement to be available to Romania by the end of the year, but that the authorities in Bucharest must take quick action to adopt the necessary measures within a week before the IMF board meets on December 10.

However, chances for that to happen are slim, Franks added.

European Commission representative Elena Flores said in turn that the Commission’s new loan tranche will also be made available to Romania after a new government is formed and the 2010 budget is approved.

The Commission will not be able to do that sooner than January, Flores said, as the Commission must follow certain procedures and go to the market and borrow the money to be disbursed.

Romania received so far about EUR7 billion in IMF money and another EUR1.5 billion from the European Commission, out of a total EUR20 billion bailout package.

The country was supposed to get another EUR1 billion from the Commission by the end of the year and a EUR1.5 billion disbursement from the IMF in December, subject to the Fund’s board approval.

The government led by Prime Minister Emil Boc received a vote of no-confidence in Parliament on October 13 and is now running the country with limited powers until a new government is sworn in.

Romania was thrown deeper into political crisis Wednesday, after the parliament blocked a new government proposed by economist Lucian Croitoru.

President Traian Basescu Friday designated Bucharest district 3 mayor Liviu Negoita for prime minister, but his chances to gain lawmakers’ approval are slim as the opposition parties, which now have the majority in parliament, have already announced they won’t endorse a Cabinet led by Negoita.