Romania has become the third European Union country to get a multi-billion euro loan to fight the recession. It will provide stability and ease pressure on the leu which is trading at record lows. Following Hungary and Latvia, Bucharest has agreed terms for 20 billion euros from the International Monetary fund.
“If international support is there, the adjustment which will be required in the economy will be cushioned because international support will provide money to finance the gap,” said the IMF’s Jeffrey Franks. The loan provides a vital lifeline for the coalition government, which took power three months ago in an overheating economy built on cheap credit. A condition of the IMF loan is that the government takes swift action to reduce the budget deficit. Voters though are wary of the cuts required to get finances back into shape. Romania has gone from being a magnet for foreign investors looking for fast growth to an economy plagued with ballooning debt and gloomy prospects. The government stands accused of making campaign spending promises it can no longer afford.