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Romania's financing gap could stand between EUR 7.4bn and EUR 16bn in 2009, pundit deems
The country's financing need for 2009 is somewhere between 7.4 and 16 billion euros, depending on different scenarios for rollover of maturing debts, mainly from the private sector, advisor to the central lender governor, Lucian Croitoru, said.
If the financing lines of banks are renewed in full and those of companies in a ratio of 90 percent, the total financing gap stands at the range's lower limit, respectively 7.4 billion euros. But if 90 percent of the banks' debt and only 60 percent of the companies' debt is rolled over, then the financing gap hikes to 16 billion euros for 2009.
“Romania's financing need stands at 45 billion euros, with the largest part of this debt stemming from the private sector. Some 10 billion euros of the short-term external private debt belong to banks and the rest stem from companies,” explained Croitoru.
Croitoru added that the negotiations with the International Monetary Fund (IMF), which were resumed today, are currently based on financing scenarios of the Romanian authorities and of the international institution, so we cannot talk yet of a certain sum solicited by Romania.
The total loan could include also funds for covering the 2010 financing gap, as the agreement would be signed on two years.
The potential sums borrowed from the IMF would go to shield Romania's currency reserve.
However, Croitoru stressed that “the IMF does not impose any restrictions related to the activity of the central lender on the foreign exchange market.” He added that the parties will most probably reach an agreement regarding the level at which currency reserves should be placed at year-end.
In case of an agreement, the letter of intent as well as the memorandum containing the economic conditions Romania pledges to respect are normally written by the IMF and signed by the Romanian authorities, Croitoru explained.
IMF could request gradual cut of spending with salaries in the GDP, central bank says
The IMF could solicit Romania, during the financing negotiations, the gradual drop of the weight spending with public salaries holds in the gross domestic product (GDP) which has recently grown from 5 to 8 percent and the reforming of some institutions, central bank pundit says.
An IMF delegation set foot in Romania Wednesday and is to assess the economy for two weeks and discuss the terms of a possible loan, part of multilateral financing package including the World Bank and the European Union.
“I know nothing of the existence of a moratorium to freeze public salaries,” Croitoru told NewsIn.
Public institutions should be reformed, especially when it comes to employees’ efficiency and salaries, he said. Romania needs to stick to the 2 percent budget deficit target for this year and take measure to cut spending and raise incomes in order to reach it, considering the economic advance prognosis for this year of 2.5 percent seems less probable.IMF works side by side with the WB in elaborating recommendations, one of which is the simplification of hiring and firing procedures.
Romanian officials met people from the IMF, the EC and from other financial institutions to assess the macroeconomic frame and the country’s need for financing.According to the finance ministry, external financing assistance coupled with the proactive measures of authorities will work as a guarantee to consolidate the financial stability on the medium-term, aiming to encourage the business environment and helping investors regain confidence in Romania’s economic potential.
Romania's economic growth will probably be negative in 2009
Croitoru also predicts that Romania's economic growth will be negative this year, considering the most recent statistics and will be followed by a comeback next year. A negative growth could modify radically the data on which the 2009 budget was built, as it counts on a GDP advance of 2.5 percent for this year.“It is difficult to predict things for next year, but the GDP advance could be half of what it was last year,” said Croitoru.Last year the country's economy moved forward by 7.1 percent, after an abrupt slowdown during the last quarter, at 2.9 percent, according to the data provided by the National Statistics Body INS.