Romanian Govt To Compel Local Authorities To Take Over Arrear Payments - Sources

According to the sources, local authorities will also be forbidden to take out loans before solving arrear problems.

Romanian Prime Minister Emil Boc Friday evening met with International Monetary Fund officials and talks focused on issues regarding arrears.

People familiar with the matter said earlier Friday the IMF is likely to ask the Romanian Government to pay at least part of its arrears to companies before disbursing a new installment of its EUR13 billion loan.

Only in the healthcare sector, government arrears sum up 1 billion lei (EUR1=RON4.2664), despite the payment of RON2 billion made in September, said the mentioned sources.

IMF mission chief Jeffrey Franks said Friday evening Romania hasn't met the end-September performance criteria in the sector of general government arrears and it will ask the IMF for a new waiver of non-observance.

End-June, Romanian government arrears stood at RON2 billion, double the half-year target agreed with the IMF.

The country 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.

An IMF mission will be in Bucharest until November 1 to assess the country's progress under the loan agreement and decide on the disbursement of new aid, worth EUR870 million.

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