REPORTERNET.COM

Romania's current account deficit is projected to stabilize at around 4.25 percent of GDP over 2011-2012, according to the technical memorandum of understanding drawn up by the International Monetary Fund after the third review under the stand-by arrangement with Romania.

The memorandum was published on Tuesday, a day ahead of the arrival to Bucharest of a new IMF mission, headed by Jeffrey Franks.

The recent strong growth in exports, particularly in the automotive and agricultural sectors, is expected to improve the trade balance in 2011. Net exports in 2012 are expected to remain broadly stable as import demand slows in line with lower export growth, the letter reads.

The private sector is projected to rollover short-term debt. Foreign direct investments inflows are forecast to recover with the help of privatization revenues. Under staff's baseline scenario, no new financing gap is envisaged.

The IMF experts on Tuesday will hold a series of technical meetings with the Romanian authorities and on Wednesday the IMF mission will begin officially the fourth review of the stand-by agreement with Romania.

The IMF mission will visit Bucharest over Jan. 25 - Feb. 6, IMF representative in Romania and Bulgaria Tonny Lybek announced on Jan. 11.

The IMF visit will take place together with the European Commission (EC) and World Bank (WB) teams.

The previous mission of the joint IMF, EC and WB delegation took place over Oct. 25 - Nov. 7, 2011 for the third assessment of the budget policies as part of the precautionary stand-by agreement with Romania.

At the end of the visit, Franks said the Romanian authorities had managed to meet all the requirements set by the IMF and are within the parameters set by it.

The Stand-By Arrangement between Romania and the IMF began on March 31, 2011 and it is a precautionary one amounting to 3.1 billion SDR or 3.6 billion euros, accounting for roughly 300 percent of Romania's share at the IMF.

The new agreement is 24-month long and it is to be conducted at the same time with a new precautionary agreement with the EU for 1.4 billion euros as well as with a 0.4 billion euros loan from the WB.

As it is a precautionary agreement, the money from the IMF can only be accessed in case of exceptional situation, such as an attack on the national currency triggered by a crisis in the region, materialized in a massive loss of reserves and trust, or in case the Treasury fails two or three times in a row to get funding at acceptable costs.

Under these circumstances, the entire amount of 3.6 billion euros that the Fund puts at Romania's disposal through the new precautionary agreement will be transferred to the National Bank of Romania (BNR).



(source: www.actmedia.eu)