Romania To Lose Face If IMF Halts Loan – Designated PM

„There is no time for delays, hesitation or mistakes. The consequences will be serious and in a chain reaction, both for the population and companies,” Croitoru said in parliament ahead of the vote for his proposed 14-minister Cabinet.

Romania, thrown into political turmoil after the government collapsed in a no-confidence motion early October, is in desperate need of the coming two tranches of a EUR20 billion IMF-led loan package.

In the absence of a proper government, however, the loan disbursements may be delayed.

Croitoru said that a possible delay or loss of the foreign financing would be hard to digest, as Romania may not be able to ink a similar agreement elsewhere. He said prolonged political uncertainty would rise the country’s financing need to EUR5 billion this year.

„Under the fiscal schedule for 2009, Romania would need approximately EUR3.5 billion by yearend, provided the reforms related to public expenditure are carried out on time. Postponing these reforms would increase Romania’s financing need to EUR5 billion over the same period, if neither the EU nor the IMF release the tranches,” Croitoru said.

Romania and the IMF signed in the spring a EUR12.95 billion two-year arrangement as part of a wider EUR19.95 billion aid package which includes funds from the EU, the World Bank and other international lenders.

The eastern European country has already received around EUR7 billion in IMF money and is relying on a third EUR1.5 billion disbursement due December to pay wages and pensions.

An IMF mission is in Bucharest until November 9 to review Romania’s economic performance and its progress in complying with the terms of the foreign aid.