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Romania's central bank wants the second installment from IMF to go to the state budget

Romania's central lender BNR is discussing about the possibility that the second installment of the loan granted by the International Monetary Fund (IMF) to go to the state budget, according to the BNR governor Mugur Isarescu, who added the money will still end in the central bank's reserve.  

He explained that if the Finance Ministry (MFP) decides to spend the money on the local market, it will need to change it in lei, at BNR, fueling the foreign currency reserve. Otherwise, it will discharge the money reserve for external payments.

President Traian Basescu declared last evening that he will meet the IMF representatives today and that aims to get the right that the second installment of the external loan to go to the state budget, instead of going to BNR.

Isarescu also mentioned today that the central lender does not encourage a decline of the exchange rate, as it could enlarge the adjustment of the current account deficit, which is already excessive.

The governor added the most recent data show the current account deficit narrowing to 5-6 percent of the gross domestic product (GDP) in 2009, from 12.3 percent last year.

In the same time, a positive factor is slashing the level of minimum mandatory reserves from 50 percent to 30 percent, trend which will continue following the agreement with IMF, according to Isarescu.

The central bank governor also declared today the Finance Ministry does not need another club loan, as it will issue foreign currency bonds in August.

MFP will sell through public subscription on August 14 state bonds worth 300 million euros maturing in 4 years, with a coupon rate of 5.25 percent.

The Finance Ministry issued state securities of 48.5 million lei this year, up four-fold compared to 2008, most of them maturing in six months.

On the other hand, MFP borrowed 1 billion euros from eight banks under the form of a club loan to cover the budget gap.

The government established a budget gap target of 4.6 percent of the GDP for the year, the equivalent of 24.3 billion lei, following the agreement inked with IMF, which set Romania quarterly targets for the budget deficit: 14.5 billion lei at the end of the second quarter and maximum 18.6 billion lei for the third quarter.

The budget deficit reached 2.71 percent of the GDP at mid-year, respectively 14.38 billion lei, slightly below the target established with IMF at 2.73 percent.

Sursa: http://www.newsin.ro

Tags: percent billion central budget state second installment mfp bnr

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