The executive board of the IMF approved on Friday a new stand-by agreement worth EUR 2 billion for Romania, designed to support the country’s ongoing reforms and prop up the reserves buffer. A completing loan of the same amount is pending approval of the EU.
Nemat Shafik, first deputy managing director and acting chair at the IMF, said Romania has been able to stabilize the economy after concluding two stand-by agreements with the international lender.
However, she added: “Real GDP has yet to return to its pre-crisis level, the economy is still vulnerable to external shocks, including volatile capital flows, and the reform agenda remains unfinished.”
“The new SBA (e.n. stand-by agreement) will support policy continuity, provide a reserve buffer, and catalyze growth-enhancing reforms. It will also put Romania on the path toward exiting from Fund support.”
The IMF representative urged Romania to resist any pressure to rollback previous fiscal reforms, and in the same time to increase the absorption of EU funds, lower arrears and prioritize public investments.
“Macro-critical reforms in the transportation and energy sectors are important to improve the business climate,” said the IMF deputy director.
On the banking side, Shafik stated banks need to accelerate the repair of balance sheet in face of growing non-performing loans, adding that the new insolvency code and the adoption of covered bond legislation will help in this process.