IMF held a first round of negotiations with BNR yesterday, as it will be the main beneficiary of the financing package, and plans to use the money to strengthen the foreign currency reserve.  

A possible lowering of CRR for foreign currency from the current level of 40 percent would mean an additional capital injection into the economy. At present, of the €26 billion foreign currency reserve, €12 bln is CRR. Thus, every percentage point cut would inject €300 million into the economy.

Lower CRR is one of the main requests of banks, which BNR has so far repeatedly refused. BNR argued that foreign currency loans involve additional risks, and a strict monetary policy is necessary to compensate fiscal policy malfunctions.

Amelia Torres, Spokeswoman for Joaquin Almunia, European Commissioner on Economic Affairs, told Business Standard that the European Commission will demand the same conditions for the loan which it was subject to when it borrowed the funds on financial markets.

“The loan for Romania will be “back-to-back. The EU [European Union] has €15 billion available from the fund for financing external payment balances of countries with problems. Romanian officials, together with representatives of the EC [European Commission] and the IMF will discuss the problems and the financing needs, as well as conditions Romania must fulfill, and how the financial aid will be distributed between the EC, IMF, and possibly other EU members might want to contribute to this effort,” Torres added.