IMF To Release New Funds To Romania Once Pre-Conditions Met

The International Monetary Fund will release another EUR914 million of its EUR13 billion loan to Romania as soon as the government has fulfilled pre-conditions to reduce budget deficit, IMF mission chief Jeffrey Franks said Wednesday.

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Speaking in a news conference, Franks said Romania's end-June targets were broadly met, except for the general government arrears. The authorities must reduce the arrears by around 2 billion lei (EUR1=RON4.2371) before the IMF's board can disburse new funds, he added.

The IMF cannot consider a new waiver of non-observance in the sector unless the Romanian authorities show serious commitment to resolve the situation, Franks said.

Romanian Finance Minister Sebastian Vladescu said last week the country hasn't met the first half-year performance criteria in the sector of general government arrears and it would ask IMF for a new waiver of non-observance.

This would be the fourth waiver of non-observance in the government arrears sector since Romania signed a EUR13 billion loan agreement with the IMF in 2009.

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.

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