IMF Announces New Two-Year Credit Deal for Romania

Romania, the IMF and the EU have reached agreement on a new, two-year deal that will give the Balkan country access to a 4.0-billion-euro credit line, an IMF official said on Wednesday.

"The authorities intend to treat the arrangement as precautionary and will not draw" any money, Andrea Schaechter, head of an IMF mission to Romania, told a press conference.

The stand-by deal, which requires approval from the board of the International Monetary Fund, comes weeks after a previous two-year agreement was completed.

Schaecher said Romania must now focus on reforms in the energy and transport sectors, while building on the achievements of the program under the previous deal.

"Structural reforms can help unlock the growth potential of Romania's economy," she stressed.

The IMF has raised its growth forecast from 1.6 to 2.0 percent in 2013 and expects gross domestic product to expand by a further 2.25 percent in 2014.

"Economic recovery is picking up," based on strong exports and a good agricultural year, Schaechter said.

She called on authorities to proceed with fiscal consolidation, "with the aim of reaching a 2013 deficit target of 2.3 percent in 2013 and not more than 1.0 percent in 2015."

Centre-left Prime Minister Victor Ponta said earlier this month that Romania needed a new deal with the IMF and the European Union to bolster investor confidence in the economy.

In 2009 when it was in the grips of severe recession, Romania concluded a 20-billion-euro bailout deal with the IMF and the EU, in exchange for strict austerity measures.

In March 2011 it signed a new, 5.0-billion euro stand-by agreement.

Under the previous deals the Balkan country has notably slashed public spending, sold stakes in major energy companies and moved to privatize its freight rail.