The billion euros secured by Romania last Thursday via thefive-year eurobond issue will be frozen at IMF's recommendation, toset up a buffer-fund at the State Treasury which would allow forseasonal pressure to be avoided as far as funding of the budgetdeficit is concerned.
The Government has made this commitment in the letter of intentsent to the Fund at the beginning of February, based on whichtranches III and IV of the loan were released, worth 2.45 billioneuros. This was the last time that the IMF board agreed for halfthe tranches to be allocated for direct funding of Romania's budgetdeficit, by making an exception to the rule of transferring themoney into the foreign exchange reserve.
The deficit financing need exceeds 7 billion euros this year, andRomania remains exposed to fluctuations in the perception offoreign investors.
Finance Minister Sebastian Vladescu says the value of the eurobondissue was set at one billion euros in order to give a clear signalto the market, as this was the first issue of this value launchedin Romania, as well as in order for the fixed interest rate not toexceed 5% a year.
"We remained at 1 billion euros in order to have a round sum, whichhas an image effect at market level: Romania issues five-yeareurobonds worth 1 billion euros for the first time. In addition, wewanted to charge a coupon within 5%, i.e. an overall cost of 5.20%,and a difference up to 1.2-1.3 billion euros would not have beensignificant," Vladescu told ZF.
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