Tags: Romania | Borrow | Billion

Romania Needs to Borrow $7.9 Billion, Will Sign New IMF Deal

Wednesday, 22 Sep 2010 07:33 AM

Romania needs to borrow almost 6 billions euros ($7.9 billion) next year to cover its budget deficit and plans to sign a new deal with the International Monetary Fund in 2011 to shore up the ailing economy, President Traian Basescu said.

On Wednesday, at least 9,000 protested in Bucharest against wage cuts and other austerity measures, authorities said. Angry protesters were demanding the government increases salaries to the 2009 level and stop layoffs of public workers.

They yelled "Down with Basescu!" and marched through downtown Bucharest, blocking traffic.

Marchers sang the national anthem, which urges Romanians to rise up against opression, and threw eggs at the Labor Ministry as they headed toward the main government building.

"We just want our basic rights," said computer engineer Ion Marius, 31, from the southern city of Ploiesti."My salary is 1,300 lei (310 euros, $405) and many people where I work earn half that."

Authorities slashed public sector wages and hiked sales tax to reduce the budget deficit, as the International Monetary Fund requested.

Romania needed 20 billion euros (US$26 billion) in bailout loans from the IMF, the European Union and the World Bank in 2009. Part of the funds helped pay state wages and pensions last year, when the country's economy shrank by 7.1 percent.

President Traian Basescu said the country still needed help with its finances.

"Romania still needs to borrow financial resources," Basescu said late Tuesday in his address to the Parliament. "This is the reason why in 2011 we will sign a new accord with the International Monetary Fund."

The country signed a 20 billion euros ($26.2 billion) loan agreement with the IMF, the European Union and the World Bank in 2009, when its economy shrank by 7.1 percent. Some of the money was used to pay salaries and pensions. The agreement ends next year.

The government took harsh austerity measures this year, slashing public sector wages by one-fourth, hiking the sales tax and pledging to cut jobs in the public sector.

Basescu said the country will have to borrow 5.7 billion euros ($7.47 billion) in 2011 just to cover the budget deficit, which will be 6.8 percent this year.

During a meeting with IMF mission chief to Romania earlier this month, Basescu said the two sides should assess in October whether Romania should extend the current agreement with the IMF or sign a precautionary agreement. In July, Basescu said he would prefer a precautionary agreement, which would allow the country to access funds only if it faces a critical situation.

However, on Tuesday, Basescu said the forecasts for 2011 show that Romania will only return to growth if reforms are implemented and the budget deficit is reduced.

He said although Romania has seen the peak of its economic crisis, it had not yet reached the peak of its "social crisis" from the recession.

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Romania needs to borrow almost 6 billions euros ($7.9 billion) next year to cover its budget deficit and plans to sign a new deal with the International Monetary Fund in 2011 to shore up the ailing economy, President Traian Basescu said. On Wednesday, at least 9,000...
Romania,Borrow,Billion
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2010-33-22
Wednesday, 22 Sep 2010 07:33 AM
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