Mugur Isarescu: A stand-by accord with the IMF means huge costs for Romania

While a stand-by agreement with the International Monetary Fund (IMF) implies costs of hundreds of millions of euros for Romania, as the non-use commission stands at 25 percent, while a loan from the European Union could be a good idea, thinks Mugur Isarescu, governor of Romanian central bank BNR. rnrnDuring a meeting with the Finance Minister Gheorghe Pogea, Isarescu stressed that the public deficit is wide and the service of the public debt is big.rnrn“We are talking about 2-3 billion euros, of which the Ministry of Public Finances hopes to obtain financing for about 2 billion euros,” mentioned Isarescu.rnrnThe BNR governor added that he debated the matter of an European loan with Romania’s President Traian Basescu and that it might prove to be a good idea, considering the country’s capacity of drawing European funds.rnrn“We do not own the capacity to absorb 6-7 billion euros through European funds, so a pre-financing from the Union would not be harmful,” concluded Isarescu.rnrnIMF, whose representatives were in Romania on a regular mission at the end of January, pressed the government to determine it to sign an accord this year, a move the Cabinet tries to elude, people close to the situation told NewsIn.rnrnRomania’s government, reticent in accepting the conditions the IMF would impose in case of a loan, wants to borrow money from the foreign market to cover the 2008 budget gap and pay debts, the same people said. Yet, the option of an aid from the IMF is not to be erased from the list, they added.rnrnRomania does not need any financial aid from the IMF, as the foreign currency reserves cover more than 90 percent of the country’s short, medium and long-term debt, the central bank’s vice governor, Cristian Popa, said at the end of October last year.rnrnHowever, since then the economic context worsened and less money than estimated is entering the government’s accounts. The state wallet is so empty that authorities mull freezing public salaries and pensions for four months to spare money for investments, a decision the president would not oppose. rn