Romania’s Rating Downgrade Should Not Influence IMF Loan Negotiation

"For a sophisticated investor as the International Monetary Fund it should not count that Romania is rated below investment grade. The macroeconomic fundamentals show this threshold is ungrounded compared with other countries," Lazea said.

According to Lazea, Romania may not accept IMF conditions upon the loan settlement.

Lazea said that if the conditions are too tough, Romania may not sign a loan agreement either with IMF or with the European Commission, adding the two institutions undertook to jointly negotiate a possible loan for Romania.

However, not concluding an agreement with IMF would have a negative impact on the Romanian leu exchange rate, Lazea added.

Ratings agencies Fitch and Standard & Poor’s both downgraded last fall Romania’s sovereign ratings to below investment grade, citing vulnerabilities in the emerging markets, spurred by the global crisis and the countries’ high current account deficits.

An IMF mission is currently in Romania to hold talks  on a potential IMF program for Romania, regarding a multilateral financing package, to be supported by the European Union and the World Bank, among other international financial institutions.

The Romanian Government intends to borrow EUR19 billion from the European Commission and the International Monetary Fund, following an evaluation made by the Finance Ministry and the central bank, government sources told MEDIAFAX Tuesday.