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Romania to draw IMF funds under follow-up deal if recession lingers

Romania is not expected to use the EUR5 billion placed at its disposal under a precautionary loan agreement with the International Monetary Fund and the European Commission, unless the economy underperforms, according to an IMF report.

On March 31, the eastern European country ended a EUR20 billion multilateral financing agreement with the IMF, the EU and other lenders, and entered a follow-up deal for the next two years. In its seventh and last review of Romania's initial loan agreement, the IMF estimates the country would post an economic growth of 1.5% in 2011 and of 4.5% in 2012.

However, under a stress scenario which involves reduced capital inflows and disappointing exports, Romanian economy would contract for the third consecutive year in 2011, IMF said. The pessimistic projections indicate a decline of 0.5% this year, followed by growth of only 3.5% in 2012.'If downside financing and growth risks materialize, the authorities might need to draw under the new arrangement,' IMF said.

Under IMF's stress scenario, higher perceived risks would reduce foreign direct investment inflows and rollover rates on private sector external liabilities would drop below 100% as banks repatriate some resources and corporations find less access to external financing.A weaker euro area recovery would also dampen exports, while the economic growth would fall by a cumulative 3 percentage points in 2011-2012, according to the report.'Lower capital inflows would require additional external financing of EUR5 billion, which would be covered by disbursements from the Fund and the EU,' IMF said.

IMF To Monitor 18 Romanian Money-Bleeding Companies Under New Deal

Romanian authorities and the International Monetary Fund have agreed to increase to 18 from 10 previously the number of companies monitored under a EUR3.5 billion follow-up deal with the international institution, according to the country's technical memorandum of understanding.

The extended list includes Romania's largest budget debtor CNH, alongside Termoelectrica, CFR SA, CFR Calatori, CNADNR, Metrorex, CFR Marfa, Electrificare CFR, Electrocentrale Bucuresti, Posta Romana, Tarom, Oltchim, as well as six other energy and railway companies.

The National Landscaping Company, or ANIF, was taken out of the list after the company managed to narrow its debt to 1.9 million lei (EUR1=RON4.1333) in 2010, from RON65.7 million a year earlier.

Romanian government estimates the stock arrears of the 18 monitored companies will increase to RON19.5 billion at the end of March, from RON18.8 billion in December last year.

However, the stock arrears is expected to decrease to RON18 billion by end 2011, according to the memorandum.

Romania Budget Deficit To Include Data From Money-Losing Companies

Romanian government will amend budget deficit calculations to include the debts of 30 state-run companies, as well as the results of investment fund Fondul Proprietatea, according to the country's technical memorandum of understanding to a follow-up deal with the International Monetary Fund.

The list of the 30 money-bleeding companies includes Romania's largest budget debtor CNH, subway company Metrorex, railway operators CFR Calatori and CFR Infrastructura, seven airport operators as well as energy companies Termoelectrica and CET Brasov.'The budget deficit will be monitored quarterly through the cash balance of the general government. The authorities will consult with IMF staff on corrective measures in the event of shortfalls in government revenue and financing,' the government said in its memorandum.

Sursa: http://www.actmedia.eu

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