Reuters logo
UPDATE 2-Romania may seek new arrangement with IMF after deal expires - PM
December 17, 2014 / 11:51 AM / 3 years ago

UPDATE 2-Romania may seek new arrangement with IMF after deal expires - PM

* IMF deals restored credibility with investors

* Romania strong enough to survive regional shocks - PM

* PM to push royalties tax change, gas links next year

* Says government is stable (Adds quotes, details, background)

By Matthias Williams and Luiza Ilie

BUCHAREST, Dec 17 (Reuters) - Romania could negotiate a new type of arrangement with the International Monetary Fund once its standby aid deal expires next year, Prime Minister Victor Ponta said on Wednesday.

The IMF came to Romania’s aid in 2009 after a real estate bubble burst, plunging the eastern European country into economic turmoil.

In a series of deals since then, Romania was nudged into cutting its deficit and implementing reforms. Some investors are jittery about Romania now cutting itself loose from the IMF.

A new agreement could mean a flexible credit line, which the IMF created in 2009 for countries with good economic track records. Such deals come with fewer conditions than the quarterly reviews Romania has had to pass to keep its standby precautionary aid deals going.

Poland took a flexible credit line from the IMF in 2009 and renewed it in January 2013.

“If we succeed to finish the aid deal successfully, and I think we will, we won’t need a new precautionary aid deal ... Maybe we can discuss another arrangement. I think there are different types of deals with the IMF, for example with Poland,” Ponta said.

Bruised by a shock defeat in a presidential election in November and the loss of coalition allies, Ponta shored up his government with a reshuffle last weekend, swapping technocrats for political appointees in key posts.

With falling fiscal and current account deficits, Ponta said Romania was better placed than ever to withstand regional shocks, especially the threat of gas supply shortages and of Russia.

“This government has a clear and stable majority. We have a clear intention to finish our mandate in 2016,” Ponta said.

Ponta’s government will look to capitalise on an election-free year in 2015 to build a consensus on a tweaked royalties tax for natural resources, he said, adding that income tax would stay unchanged in 2015 and 2016.

It will also push gas connections in the region to shield Romania, which relies less on Russia than its neighbours but still imports about a fifth of its needs, from potential shortages. Bucharest will also invest over 1 billion euros on a new pipeline connecting Black Sea gas fields to the national grid, Ponta said.

Fondul Proprietatea, a fund with stakes in energy and transport firms, in November called on Romania to consider a new IMF deal.

“Investors trust politicians to a certain extent but would still like this sort of external check from international institutions,” Fondul’s manager Grzegorz Konieczny said. (Editing by Hugh Lawson)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below