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ING: The funding of the budgetary deficit with money from IMF could harm RON

The utilization of the funds from IMF to partially finance the budgetary deficit, even for the investment projects, could jeopardize the appreciation of the national currency on medium term, ING Bank Romania analysts consider, according to Mediafax. However, the economists of the bank consider that the medium term appreciation of the national currency could be "endangered" by the utilization of the money from IMF to partially finance the budgetary deficit.

"The same will be the situation even if the IMF funds are used to finance the investment projects. Such a decision, which seems to be appropriate at this moment, will determine an increased effort in the future to return the debt and will exert pressures in the direction of the depreciation of the local currency, in the context in which the loan from the international financial institution must be returned until 2015," ING Bank Romania analysts mention.

The economists show that the funds that have been and will be cashed from the European Commission are and will be used to fund the budgetary deficit, which already means an increase of the pressure in the direction of the depreciation of the Leu on medium term, considering that it is an amount of EUR 5 bln.

ING analysts recall that the Leu has depreciated against the EUR towards the end of 2008 and the beginning of 2009, and now the exchange rate is in a period of stability thanks to the presence of the central bank on the foreign currency market, the signing by Romania of a funding agreement with IMF, EU and other international institutions, with a total value of around EUR 20 bln, and the improvement of the confidence of the investors at global level.

 

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Tags: could deficit budgetary ing

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