“If the budget deficit widens, the question of its financing arises. In my view, besides the Eurobond issue, Romania could cover a large part of its deficit through some quick and inexpensive methods,” he said.

The authorities are currently forced to borrow massive amounts, to cope with the sharp drop in state budget revenues, due to the economic and financial crisis. Last May, Romania concluded a financing agreement for €20 billion with the International Monetary Fund (IMF), the European Commission, and the World Bank. An IMF delegation is currently in Romania to assess the country’s macroeconomic evolution and to decide whether to release a €1.9 bln tranche of the loan. The first €5 bln were already sent to the National Bank of Romania (BNR).
The IMF delegation, led by Jeffrey Franks, head of IMF’s negotiation mission, yesterday met with Romanian officials for technical talks. New meetings will be held today, which could be attended by Prime Minister Emil Boc and BNR Governor Mugur Isărescu.

“I do not believe that the IMF will have reason for criticism during the talks with Romanian officials regarding the economy and macroeconomic policies assessment. The government has proven it has fiscal discipline and the Treasury did well,” Zaciu said. “I believe that talks will focus mainly on finding solutions to finance the gap of the second half of the year,” he added.

Sources close to the talks recently said that the IMF has a grim estimate for the country’s indicators - a 7-8 percent shrinking of gross domestic product (GDP), compared to the 4.1 percent initially foreseen, and a budget deficit up to 5.5-7 percent of GDP, instead of 4.6 percent, agreed upon earlier this year. According to Zaciu, Romania hit the bottom of the economic decline in the second quarter of 2009, while “in Q3, the GDP evolution will be impacted only by agriculture. It remains to be seen to what extent.”

Victoria Palace, worth up to €65 million, the Ministry of Transports building, valued at €120 mln, without the corresponding land, and the Ministry of Culture building, at €18.5 mln, are three of the buildings that the state could sell and lease back, according to an analysis by MONEY.ro.

The need to cover the budget deficit and the liquidity shortage could make the Romanian state resort to a less frequently used solution at the European level: a sale-and-leaseback transaction of its buildings, which could bring in hundreds of millions or even billions of euro, in the short-run.

Some investors are interested in taking over such buildings, adding that the state is the perfect tenant, but analysts say that this system could prove to be too expensive.

“Leasing is a financing method that is more expensive than the bank loan, because the lending regulation is less strict. The authorities could consider this option only if they do no have a less expensive place to borrow from,” real estate expert Ion Radu Zilişteanu said.