Romania procures 27 billion dollars in assistance from IMF, EU

Romania procures 27 billion dollars in assistance from IMF, EU Bucharest - Romania is set to receive a nearly 20-billion euro (26.9-billion-dollar) package cobbled together by the International Monetary Fund (IMF) and the European Union to help it weather the ongoing financial crisis.

The IMF will make 12.95 billion euros of the money available in a two-year standby credit, said Jeffrey Franks, head of the IMF mission, Wednesday at the end of negotiations.

The European Commission will pull 5 billion euros from its emergency fund to help. Additionally, the World Bank and the European Bank for Reconstruction and Development, along with other institutes, will each contribute 1 billion euros to assist Romania.

To access the money, Franks said Romania will have to ensure that its net new debt for 2009 does not exceed 5.1 per cent of gross domestic product. That figure reached 5.3 per cent in 2008. Romania would also have to keep its budget deficit to within 4.6 per cent of GDP.

By taking the aid, Romania's government would also commit itself to freezing wages in the public sector and reforming public pensions. Franks said wages in the public sector have doubled within the last three years.

Additionally, Romania's central bank would be obligated to hold inflation below 4.5 per cent.

Franks added that Romania's banking system remains unstable. Nonetheless, he said IMF officials will meet Thursday in Vienna with the 10 banks that do the most business in Romania in an effort to convince them not to withdraw funding from their operations in Romania.

The IMF has forecast that Romania faces a contraction of 4 to 6 percent in 2009, after 7.1 per cent growth in 2008.

Romanian Prime Minister Emil Boc is expected to sign the agreement in two weeks. The first 5-billion-euro funding injection could be headed to Romania by early May. (dpa)