In line with the Romanian government's request, the International Monetary Fund (IMF) has extended the country's current Stand-by Arrangement. The IMF approved a three month extension to June 30 of this year.

The agreement was due to expire on March 30, but the Romanian authorities requested more time to meet all the conditions of the deal with the IMF. Although the IMF has usually been positive about Romania's progress in meeting objectives, the speed of restructuring and privatization of state-owned companies has consistently failed to meet the deadlines set by the financial institution. The IMF also mentions the need to reduce central and local government arrears.

The Romanian government requested the extension at the start of the year. At the time, the IMF delegation agreed “in theory” to the extension, but did not give official approval. The newly approved extension will give Romania time to implement the changes needed to successfully pass a final combined seventh and eighth review of the Stand-by Arrangement, according to the IMF.

Romania had an agreement with the IMF, signed in 2004, which was not completed, and ended after one evaluation. The country later had another deal with the IMF, for some EUR 13 billion, which ended in 2011. The IMF approved the existing deal, worth some EUR 3.5 billion, on March 25, 2011. The Romanian authorities have treated the funds as precautionary, choosing not to draw on them.

Liam Lever, liam@romania-insider.com