UPDATE: The International Monetary Fund's board has approved the precautionary stand-by arrangement planned for Romania and has also finalized the seventh and final review of the current stand-by arrangement that started in 2009. The precautionary agreement entails a EUR 3.6 billion loan, following the EUR 13 billion stand-by agreement started in 2009.

The authorities have informed the IMF that they intend to treat the new arrangement as precautionary and therefore do not plan to draw under it. The new loan will be in conjunction with precautionary support from the European Union of EUR 1.4 billion and a loan from the World Bank of EUR 0.4 billion.

“Policy implementation under the Fund-supported program has remained strong and the authorities are seeking a follow-up precautionary arrangement to signal their commitment to continued reform. The fiscal and structural measures already implemented are yielding results. The economy has stabilized and growth is resuming. The new program appropriately focuses on building on achievements to date with additional fiscal consolidation and structural reforms to boost growth and improve private sector participation in the economy," said John Lipsky, First Deputy Managing Director and Acting Chair of IMF.

“The eighth disbursement will become available for the Romanian authorities shortly after the Board meeting. The authorities, however, have decided not to draw the funds under the seventh review,” according to Jeffrey Franks, the IMF mission chief for Romania.

Alex Camburu, alex.camburu@romania-insider.com; Corina Saceanu, corina@romania-insider.com