First Tranche Of EC Loan Reaches Romanian Treasury

The first tranche of 1.5 billion EUR from the 5 billion EUR loan contracted by Romania with the European Commission has been transferred to the Romanian Treasury, according to Gheorghe Gherghina, Secretary of State with the Finance Ministry. "I understood from the Treasury that the money had just been transferred as the European Union decided to expedite the issuance of the bonds," Gherghina said.

The next tranche could be disbursed towards the end of the year, after a preliminary review scheduled for October. A month ago, the European Union signed a memorandum of understanding with Romania with regards to a 5 billion EUR loan to be disbursed by the European Commission to help settle Romania"s payment balance. The document also stipulated the conditions for such loan, of which the first tranche stands at 1.5 billion EUR.

The second tranche, in the amount of 1 billion EUR, is scheduled for end-2009, while the third tranche, worth up to 1.15 billion EUR, is scheduled for the second quarter of 2010. The fourth tranche, worth up to 1.2 billion EUR, will come in the fourth quarter of 2010, while the final tranche, worth 0.15 billion EUR, is planned for the second quarter of 2011.

The conditions attached to the loan include measures for fiscal consolidation, fiscal administration, structural reform, as well as the regulation and supervision of the financial sector. The loan from the European Union is based on a decision made by the EU Finance Ministers in early May and is intended to mitigate short-term liquidity pressure and restore investor confidence by facilitating the implementation of a set of reform measures designed to adjust internal and external imbalances.

The loan was validated on 6 May, two days after Romania had signed an agreement with the International Monetary Fund, and is part of a multilateral financial aid package worth 20 billion EUR. The EU will finance the seven-year loan to Romania by issuing bonds. Similar financial aid has been offered to Hungary and Latvia, in the total amount of 9.6 billion EUR.