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IMF delegation starts on Tuesday seventh Stand-by Agreement review mission

An International Monetary Fund (IMF) mission headed by Jeffrey Franks will be in Bucharest over January 25 - February 8, 2011 for the seventh review conducted under the Stand-By Agreement.

The IMF mission will visit Bucharest at the same time with the European Commission (EC) and World Bank (WB) missions.

The international finance experts will pursue two major goals, specifically achieving the seventh assessment of the fulfillment by Romania of the conditionalities set forth in the Stand-By Agreement, and 'starting negotiations on a possible future arrangement. Apart from meetings with the authorities, the members of the IMF mission will meet with representatives of political parties, trade unions, business associations, banks and civil society organizations,' reads a release received last week from the IMF Bucharest Office.

'After the visit, the mission will present its findings to the IMF Board of Directors. After the IMF Board approves the seventh Agreement review report, the eighth installment worth 874 million SDR - or about one billion euros - of the EUR 13.15 bln loan granted by the IMF to Romania on May 4, 2009, will be unlocked in about two working days,' reads the release signed by the head of the IMF Office for Romania and Bulgaria Tonny Lybek.

Apart from evaluating Romania's recent economic performance, the Fund mission will also discuss with the Romanian authorities the economic objectives for the period still left of the current Stand-By Agreement.

Romania received so far EUR 12.44 billion out of the total IMF loan of EUR 13.15 billion, plus EUR 3.5 billion out of a total EUR 5 billion worth of EC loan, and EUR 300 million out of a total EUR one billion worth of WB loan; another EUR 300 million will be disbursed within short, following the WB Board's approval on January 20, 2011.

The most recently released installment of the IMF loan, amounting to EUR 904.8 million euros, was unlocked to Romania on January 7, 2011. The total support package for Romania, agreed upon on May 4, 2009 with the world's leading lenders, amounts to 20 billion euros.

Romania's Follow-Up Deal With IMF May Not Include Bank Exposures

Romania's planned follow-up deal with the International Monetary Fund might not include a new agreement with the parent banks of the country's top largest lenders, as the mother banks are maintaining their exposure at sufficiently high levels, people familiar with the negotiations said Monday.

Early 2009, Romania secured a EUR20 billion aid package from the IMF, the European Commission and other international lenders to cushion the effects of the recession.The parent banks of Romania's largest nine lenders met in Vienna at the time and agreed to keep their overall exposure to the country unchanged by April 2011, while ensuring capital adequacy levels over 10% for their local subsidiaries.

As of July 2010, the parent banks can reduce or increase their exposure to Romania by up to 5% compared to the initial level.According to people familiar with the situation, the parent banks have not lowered their exposure to Romania since July last year. In fact, some of the banks have even increased their exposure, the mentioned sources added.

Jeffrey Franks, IMF mission head to Bucharest, told MEDIAFAX recently that Romania's agreement with the parent banks is temporary and the country won't probably need it any more in a year and a half, as the banks will want to increase their exposure voluntarily.'Our expectation for the Vienna initiative was that this would be a temporary measure and (...) I think we are getting close to that point,' Franks said in October last year.

'The issue of large state-owned companies will be better monitored under the new agreement and the IMF appreciates that selling the viable companies would ensure a cheaper financing of the budget deficit,' the people familiar with the talks told MEDIAFAX.

Romania's new arrangement with the IMF, to be enforced sometime after a standing EUR13 billion agreement expires in May, will include clear targets regarding the arrears of large money-bleeding companies, IMF mission head Jeffrey Franks said last week.According to IMF data, Romania's top ten largest money bleeders registered total arrears worth 7 billion lei (EUR1=RON4.2684) in November last year.

In 2009, Romania and the IMF signed a two-year standby loan agreement, part of a larger EUR20 billion package that includes funds from the EU, the World Bank and other foreign lenders.

Romanian authorities said recently the follow-up arrangement will likely be a precautionary deal, but gave no details on how much they want to borrow.

Joint teams from the IMF and the European Commission will be in Bucharest until February 8 for the seventh and final review of the two-year agreement and discuss the terms for a new deal.

Sursa: http://www.actmedia.eu

Tags: total romanias lenders parent exposure their billion banks agreement stand review mission romania bucharest seventh

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