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A New Romania-IMF Agreement Can Ease Financing On Private Mkt – IMF Official

A new agreement between Romania and the IMF can ease financing on the private market, even if Romania does not use the funds available under the agreement, as this will show investors that the state is on the right path, said Jeffrey Franks, head of the IMF mission to Romania.
A New Romania-IMF Agreement Can Ease Financing On Private Mkt – IMF Official
11 apr. 2010, 19:18, English

Franks stressed Romania will be the one to decide whether or not it wants to conclude a new agreement with the International Monetary Fund, adding the fund will not impose a new agreement.

Franks pointed out that getting the approval of the IMF board for an agreement can ease financing on the private market, as many investment banks and bond investors analyze and see the IMF agreement is on the right path and thus, will rush to invest in the respective country.

Speaking in a TV show on private TV station PRO TV, Franks said that, in many cases, countries think that getting the IMF approval for an agreement and undergoing review missions by IMF experts show they are on the right path and that changes undertaken in the agreement are being carried out.

Franks underscored that Romania, whose stand-by agreement with the IMF ends next year, has two options, namely, a flexible credit line or a precautionary stand-by agreement.

Franks said the flexible credit line is an instrument recently developed by the fund for countries with solid policies, but likely to be exposed to shocks.

On March 30, Romanian President Traian Basescu told IMF chief Dominique Strauss-Kahn that Romania wants a long-term collaboration with the IMF.

„We would like a long-term cooperation with the IMF. When we finish this agreement, we’ll probably request an assistance stand-by agreement or a flexible credit line,” Basescu told Dominique Strauss-Kahn at that time, in a meeting at the president’s office, adding the IMF lends Romania credibility.

Basescu also said at the time that Romania needs the IMF and the World Bank’s long-term assistance to complete its structural reforms, be it public administration, education, healthcare or social security system.

In 2009, Romania secured EUR13 billion in aid from the IMF, as part of a larger package that includes funds from the EU, the World Bank and other foreign lenders.

So far, Romania received around EUR9.3 billion from the IMF and EUR2.5 billion from the European Union.