Agreement Reached on Romania’s Precautionary Loan

The IMF and Romania reached a staff-level agreement to unlock the next tranche of the country’s precautionary 5 billion-euro loan, said the IMF’s Mission Chief Erik de Vrijer.

The international lender is assessing the government’s progress on meeting fiscal targets and planned state-asset sales after a political conflict between Prime Minister Victor Ponta and suspended President Traian Basescu undermined investor confidence, pushing the country’s currency to record lows and boosting borrowing costs.

For the IMF’s board to approve disbursing of the loan tranche, Ponta’s government must cut overdue debt owed by local authorities, increase gas prices and offer for sale by September a 15 percent stake in Transgaz SA (TGN), the country’s natural-gas grid operator and a majority holding in chemical company Oltchim SA.

Ponta’s government, the country’s third this year, pledged to comply with the terms of the precautionary loan agreement with the IMF. A new joint mission of the IMF and the EU will return to the country “soon after parliamentary elections” when the details of the 2013 budget will be outlined.

Source: Bloomberg news