Knock, knock, IMF?

The vice-governor of the NBR - Cristian Popa and the secretary of state of the Ministry of Public Finances (MFP) - Bogdan Drăgoi, are in Washington these days to have preliminary talks for a foreign loan from the IMF, Mugur Şteţ, spokesperson of the Central Bank, said.

He explained: "Just as prime-minister Emil Boc, as well as the governor of the NBR, Mugur Isărescu, stated, the discussions involve the preliminary analysis of an agreement with the European Union as well as with other international financial institutions, including the IMF ".

Prime Minister Emil Boc stated yesterday that there are ongoing official talks with the European Commission concerning the financing of the budget deficit. The governor of the Central Bank recently said that Romania"s foreign debt is somewhere between 2 and 4 billion Euros, far smaller than that of other countries in the region. He also explained that currently the effects of a foreign loan are being evaluated in order to determine the amount, the reimbursement schedule and the optimal cost.

Adrian Vasilescu, advisor to the governor of the Central Bank, said that the destinations of these funds will vary, meaning the funds from the IMF will be used exclusively to adjust the current account deficit, because this is the rule of the IMF, and the ones from the European Commission will probably be used to cover the budget deficit, and the priorities for the funds received from the European Investment Bank are yet to be determined.

On the requirements that the IMF will impose, Mr. Vasilescu explained that they concern economic performance. "Generally they are aimed at a reduced budget deficit, as well as wage increase during this period, because there is a certain need to keep a certain balance between wages and productivity", he said.

"Given that the money will be paid in installments, not complying with the imposed rules, would lead to the next installments of the loan not being paid", Mr. Vasilescu said.

The interest to be paid is generally low, and it will be set through negotiations.