Romania seeks EUR 4bn loan from IBRD for public debt re-financing

By bne IntelliNews November 7, 2013

Romania’s government has applied for a EUR 4bn development policy loan from the World Bank’s division - the International Bank for Reconstruction and Development, Adevarul daily reported. Out of the EUR 4bn loan, Romania will draw EUR 1bn per year in the coming four years.

Romania already secured a EUR 2bn credit line from IMF for forex reserves consolidation and EUR 2bn from the EU for BoP stabilisation under a two-year arrangement. The credit lines are to be treated as precautionary.

Romania will have to meet criteria on public debt management in order to keep the  EUR 4bn loan from the IBRD on track. The first targets are set for end-Feb 2014.

The measures envisaged under the agreement with the IBRD refer to public debt management, public expenses management, public investment management, performance-based budget allocations [prioritisation of public spending], taxation policies and their impact on the business environment. In the energy sector, the measures include steps, most of which were already implemented – IPOs at Nuclearelectrica, Romgaz, the restructuring of Hidroelectrica. Romania should also observe the energy price liberalisation calendar.

The complete set of measures to be included in the agreement with the IMF is to be drafted during a pre-appraisal mission in December based on proposals coming from the Romanian side. The first tranche is not conditioned on meeting specific targets.

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