EU releases additional EUR 1 billion to Romania

Newsroom 15/03/2010 | 10:54

The European Union has disbursed EUR 1 billion for Romania in a second tranche of the EUR 5 billion package of financial assistance agreed upon in 2009 for balance-of-payments support.

“I’m happy to say Romania has fulfilled the conditions to receive the second tranche of the EU loan. The financial support granted by the European Union, the IMF and other international financial institutions has helped Romania overcome the toughest period of the economic and financial crisis,” said Olli Rehn, the EU Commissioner for Monetary and Economic Affairs. He added that the progress made regarding fiscal consolidation needed to be accompanies by structural reforms, including the adoption and implementation of the law regarding fiscal responsibility and the revised pension legislation.

Another two EU countries are also benefiting from EU financial assistance to support their balance of payments in the context of the unfolding financial crisis. In November 2008, the Council agreed to a Commission proposal for EUR 6.5 billion in aid for Hungary. In January last year a EUR 3.1 billion package was approved for Latvia. In May, the overall ceiling for balance-of-payments support was doubled to EUR 50 billion.

EU financial assistance is intended to help countries withstand short-term liquidity problems, restore investor confidence and correct large imbalances in their economies. In return, recipient countries must commit to carrying out reforms to correct public deficits, boost competitiveness and improve financial supervision.

From 20-27 January, a joint Commission, IMF and World Bank mission visited Bucharest to assess Romanian compliance with the policy conditions attached to the EU Balance of Payments Program. The mission concluded that Romania had met most of these policy conditions. Romania has achieved the cash fiscal deficit target for 2009 (7.3 percent of GDP), adopted a 2010 budget in line with the agreed deficit target (5.9 percent), introduced structural reforms and strengthened financial sector supervision.

 

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