November 6 (SeeNews) - The International Monetary Fund (IMF) will postpone by one month until January a 1.5 billion euro ($19.4 billion) loan tranche for Romania, the third one under a 13 million euro stand by arrangement with the country, Bucharest-based news agency Mediafax reported on Friday.
"It is highly likely the tranche will be postponed, probably until January, thus allowing the country to draft and approve the budget for 2010. The most important problem is solving the political aspects," Mediafax (www.mediafax.ro) quoted sources closed to the talks between the IMF and the government as saying.
An IMF mission is wrapping up on Friday a two-week review of Romania's economic performances under the stand by agreement. The IMF mission will hold a news conference at 1200 GMT.
The sources said the main problem regarding the country's 2010 budget is that in order to reduce the fiscal gap the government must either make massive layoffs in the public sector or hike taxes. Considering Romania is holding presidential elections on November 22, and mostly likely a runoff on December 6, the IMF understands that no political party is likely to publicly assume such austere measures, they added.
Earlier this week, the head of the IMF mission to Romania Jeffrey Franks said the country has met almost all targets set for September under the arrangement with the IMF, with maybe one exception.
The sources said that the exception is related to arrears. Under the agreement, the Romanian government must not accumulate new arrears in funds owed to the state budget by local authorities and state-controlled firms.
In late March Romania reached a 20 billion euro financial agreement with the IMF, the European Union, the World Bank and other international organisations. Under the agreement, the IMF is to lend Romania 12.95 billion euro, the World Bank will extend a loan of 1.0 to 1.5 billion euro and the rest will come from other international organisations, including the European Bank for Reconstruction and Development.
($=0.6712 euro)