Romania has agreed with the International Monetary Fund on a two-year stand-by arrangement worth 12.95 billion euros. The total financing package, provided by the Fund, the European Union, the World Bank and EBRD is to reach 19.95 billion euros.
The foreign aid package is to be discussed by the IMF's Executive Board in Washington over the next few weeks; the first tranche of the financing, worth five billion euros, will be available right after the approval.
The IMF delegation that was in Bucharest would meet with the main foreign banks operating in Romania in Vienna today, in order to request them not to withdraw the money from the country and provide a capital "buffer" stated the IMF's mission head Jeffrey Franks.
"We'll be Vienna tomorrow (today i.e.) to meet with the main banks in Romania to enlist their support," Franks told a news conference. He added the IMF would request the main banks to maintain their exposure to Romania, that is not to withdraw money from the country and a capital "buffer" to keep liquidity at a certain level. "We will request a capital buffer so that there won't be any danger of Romanian banks dropping below a certain liquidity level (...).
"We want a voluntary commitment from these banks and if they do it, our package will advance (...) there will be benefits."
"The Fund will meet with the presidents of Erste Group, Volksbank, Raiffeisen International, Societe Generale, UniCredit, EFG Eurobank, National Bank of Greece, Alpha Bank, Piraeus and of one more bank, to see what they want to do in Romania and get a commitment that they will continue to support the banks on the local market," the sources quoted by Mediafax added.
The inflationary rate should go back to the band targeted by the National Bank of Romania by the end of the year; the monetary policy would be relaxed when conditions allow it, the IMF official said
"We reaffirm our support for the direct inflation targeting regime of the National Bank. It will be crucial that the inflation match the target of the National Bank by the end of 2009," Franks added during the press conference.
The 2009 inflation target is 3.5%, with one percent allowed as variation, a target that the NBR will propose to the Government for 2010, too.
The central bank has not been able to keep inflation within the targeted interval over the last two years. The IMF official also said that the Government should revise, with international help, the salary and pension system of the public sector, as well as the monitoring and control procedures in state-owned enterprises within two years' time. Franks said salaries in the public sector had doubled in three years.
"A salary system will be enforced that will not rely as much on bonuses as before, which should not exceed 25% of it," the IMF representative stated.
He added the Government would have to also enforce, during the same period of time, a law on fiscal responsibility, to avoid new increases of the budget deficit.
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