Romania to get euro20 billion in rescue loans

BUCHAREST: Crisis-hit Romania will receive euro20 billion in rescue loans from a group of lenders led by the International Monetary Fund, officials said on Wednesday.

Jeffrey Franks, the head of the two-week IMF mission to Romania, told reporters that the IMF had agreed to a two-year bailout loan of euro12.95 billion ($17.49 billion). The first part, euro5 billion, will be available in the summer.

Franks said another euro5 billion will come from the European Union, euro1.5 billion from the World Bank, and the rest from the European Bank for Reconstruction and Development.

Romania is the third EU member to receive an IMF-led bailout loan after Hungary and Latvia, having been hit hard by the economic crisis in recent months.

Prime Minister Emil Boc is expected to meet ministers later Wednesday and approve the loan request.

Franks said that as a condition of the loan, Boc's center-left government would take measures to gradually reduce the budget deficit.

The European Commission said in a statement that ``a key element of the economic policy package is an immediate and sustained fiscal consolidation to limit the budget deficit to 5.1 per cent of Gross Domestic Product this year and to below 3 per cent of the GDP in 2011.''

The country's public finances have been stretched by the economic downturn, with lower revenues from income and corporate taxes as well as higher costs on social security for the jobless. The financial system has also been strained as some international investors have pulled out their capital on fears about the stability of the country's economy.