Romania's June Arrears At RON2B, Double The Agreed Target

Romania's government arrears stood at 2 billion lei (EUR1=RON4.2527) at the end of June, almost double compared with the target agreed with the International Monetary Fund, of RON1.09 billion, according to an official document obtained by MEDIAFAX.

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The arrears rose by RON240 million in the second quarter, the government said in the additional letter of intent to the IMF.

The International Monetary Fund will release another EUR915 million of its EUR13 billion loan to Romania as soon as the government has fulfilled pre-conditions to reduce budget deficit, including a reduction of arrears, IMF mission chief Jeffrey Franks said Wednesday.

"As a prior action, we intend to pay down RON1.9 billion in arrears in the health sector (the largest source of arrears)," the government writes in the letter of intent.

Romania must bring its government arrears down to RON480 million by year-end and eliminate them altogether by the end of the IMF program in 2011.

A joint mission from the IMF and the EU reviewed Romania's compliance with the terms of a EUR20 billion bailout package signed last spring.

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