Romanian President Basescu speaks of new agreement with IMF

By bne IntelliNews July 22, 2013

The new agreement with the IMF should prepare Romania for the accession to the single currency area and allow the government help banks finance the real sector, President Traian Basescu said in public comments quoted by Mediafax. The comments were made after a meeting with the IMF managing director Christine Lagarde and the Fund’s expert team. Basescu thus spoke about less orthodox dimensions of the would-be follow-up agreement with the Fund.

The major problem related to the adoption of the euro is the weak productivity of the state sector, Basescu said. Romania already meets three if the five Maastricht criteria and is able to meet the other two – but the big challenge is in reforming the state sector in order to improve its competitiveness, he explained.

Romania will have to negotiate with the IMF a guarantee fund aimed at helping banks resume financing of the real sector, Basescu commented on a separate note. Banks should finance small and medium enterprises, he stressed, reiterating a key idea expressed by IMF's Lagarde.

Lagarde encouraged last week in Bucharest banks to finance SMEs and other sectors seen by banks as high-risk as an instrument to stimulate growth.

Nonetheless, not all SMEs – but only those in the sectors outlined as strategic by the government’s sectoral development strategy, will be supported by state guarantees, the president’s advisor Bogdan Dragoi explained as quoted by Bursa daily.

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