HIGHLIGHTS-IMF suspends Romania aid review, funds delayed
BUCHAREST, Nov 6 (Reuters) - The International Monetary Fund has put off a review of Romania's 20 billion euro rescue package and will delay a badly needed aid tranche originally slated for next month, officials said on Friday.
A political crisis that has roiled the Black Sea state since the centrist government collapsed last month and political wrangling ahead of a Nov. 22 presidential election has halted IMF-prescribed reforms and driven up investors' risk perception.
A European Commission expert with the IMF team in Bucharest also said the loan tranche would not be disbursed this year.
The following are comments made by officials on Friday. * For story please click on [ID:nL6703731]
IMF MISSION HEAD JEFFERY FRANKS:
ON MISSION
"We feel we can rapidly conclude our review of the economic situation... once the political situation is resolved."
"While we're not able to complete our review at this time... we are prepared to send follow up missions to Bucharest as soon as the situation allows."
"The international community will continue to support Romania ... but ultimately it depends upon Romanians to solve Romania's problems with our support."
ON ECONOMY
"We are now expecting growth for 2009 in a range of -7.5/-8 percent. We continue to expect for 2010 weak positive growth of 0.5 percent."
ON BUDGET
"Our information suggests the deficit target we've agreed with the government for September was also met. The objective which we call indicative, which means non-binding, for primary expenditure target was not met."
"We do not have final information on reduction arrears (to the budget from state entities) but we believe this target was likely missed."
"We think that with additional measures agreed with the interim government at this point... the deficit would likely be on the order of 7.8 percent of GDP."
EUROPEAN COMMISSION REPRESENTATIVE ELENA FLORES
"On the EU side, I don't exclude approval of the loan tranche this year ... but in terms of disbursement it cannot happen this year."
ROMANIAN PRESIDENT TRAIAN BASESCU:
ON IMF
"The IMF demands as mandatory... to approve the state budget in the first (part) of December, but in any case before Dec. 10, when the fund has a board meeting."
"Another imperative demand ...is the fiscal responsibility law to be transmitted to parliament and approved by the end of the year."
"The review will be continued after Romania has a government."
ROMANIAN CENTRAL BANK GOVERNOR MUGUR ISARESCU:
ON IMF LOAN
Asked whether he expected the next loan tranche to be delayed, Isarescu said: "Yes, things appear obvious now."
ON BUDGET FINANCING
"The financing of the budget deficit is an acute problem... because the budget construction was made on this very large financing from international lenders in the fourth quarter."
A political crisis that has roiled the Black Sea state since the centrist government collapsed last month and political wrangling ahead of a Nov. 22 presidential election has halted IMF-prescribed reforms and driven up investors' risk perception.
A European Commission expert with the IMF team in Bucharest also said the loan tranche would not be disbursed this year.
The following are comments made by officials on Friday. * For story please click on [ID:nL6703731]
IMF MISSION HEAD JEFFERY FRANKS:
ON MISSION
"We feel we can rapidly conclude our review of the economic situation... once the political situation is resolved."
"While we're not able to complete our review at this time... we are prepared to send follow up missions to Bucharest as soon as the situation allows."
"The international community will continue to support Romania ... but ultimately it depends upon Romanians to solve Romania's problems with our support."
ON ECONOMY
"We are now expecting growth for 2009 in a range of -7.5/-8 percent. We continue to expect for 2010 weak positive growth of 0.5 percent."
ON BUDGET
"Our information suggests the deficit target we've agreed with the government for September was also met. The objective which we call indicative, which means non-binding, for primary expenditure target was not met."
"We do not have final information on reduction arrears (to the budget from state entities) but we believe this target was likely missed."
"We think that with additional measures agreed with the interim government at this point... the deficit would likely be on the order of 7.8 percent of GDP."
EUROPEAN COMMISSION REPRESENTATIVE ELENA FLORES
"On the EU side, I don't exclude approval of the loan tranche this year ... but in terms of disbursement it cannot happen this year."
ROMANIAN PRESIDENT TRAIAN BASESCU:
ON IMF
"The IMF demands as mandatory... to approve the state budget in the first (part) of December, but in any case before Dec. 10, when the fund has a board meeting."
"Another imperative demand ...is the fiscal responsibility law to be transmitted to parliament and approved by the end of the year."
"The review will be continued after Romania has a government."
ROMANIAN CENTRAL BANK GOVERNOR MUGUR ISARESCU:
ON IMF LOAN
Asked whether he expected the next loan tranche to be delayed, Isarescu said: "Yes, things appear obvious now."
ON BUDGET FINANCING
"The financing of the budget deficit is an acute problem... because the budget construction was made on this very large financing from international lenders in the fourth quarter."
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