Băsescu: We're going to the IMF, nobody will lend us long-term money

President Traian Băsescu officially admitted in a speech before the Parliament that Romania would sign a new loan agreement with the International Monetary Fund (IMF) in 2011.

The President did not say how much money Romania would request from the Fund, but explained that Romania would need 5.7 billion euros just to cover the budget deficit that it committed to keep at 4.4% of GDP in 2011.

“In 2011 we need to borrow 5.7 billion euros just to cover the budget deficit (…) In 2011 we will sign a new agreement with the International Monetary Fund.”

Businesspeople believe the President’s messages announcing a new loan only serve to make fears about Romania’s real situation worse rather than calm things down.

“If the President comes up with a speech that clearly sends the message that there is no other way than an IMF loan, I’m afraid it will induce fears that will create an entire chain of negative reactions, and the problems will not be fixed by public speeches. I for one am totally against a new IMF loan,” says Florin Pogonaru, chairman of the Association of Businesspeople in Romania (AOAR).

According to the head of state, the agreement with the International Monetary Fund has to do with Romania’s credibility, but also with the fact that because of the deficits and the imbalances in the economy nobody will lend long-term money to Romania.

“I’d want us to borrow for ten, five or fifteen years. Only that Romania has huge trouble taking loans falling due in three years.”