EU Executive Asks for $5 Billion for Romania



EU Commissioner Joaquin Almunia asked EU governments for euro5 billion in balance of payments aid for Romania on April 21, 2009.

The European Commission on Tuesday asked EU governments for euro5 billion ($6.46 billion) in balance of payments aid for Romania as part of an international loan package to improve the country's cash flow, shore up its financial sector and keep its budget deficit in check.

"EU support to Romania underlines our solidarity to our member states," EU Commissioner Joaquin Almunia said in a paper to the EU finance ministers who will debate the aid proposal May 5.

"The support is conditional upon the implementation ... of a major program of fiscal, financial and structural adjustment" in Romania, he said. "This will ultimately put Romania in a position to return to a sound and sustainable convergence path."

The EU loan aid is part of a multilateral package worth euro20 billion that also includes some euro13 billion from the International Monetary Fund and euro2 billion from the World Bank, the European Investment Bank and the European Bank of Reconstruction and Development.

Almunia said the aid aims to boost Romania's short-term cash flow problems and improve competitiveness to put "the economy back on a sound and sustainable footing."

It would cover an adequate capitalization of banks, stronger financial sector supervision and a bolstering of Romania's deposit guarantee scheme.

A key economic goal is "sustained fiscal consolidation to limit the budget deficit to 5.1 percent of GDP in 2009, falling further to below 3 percent of GDP in 2011," said Almunia.

The EU has already granted balance of payments aid to Hungary and Latvia of up to euro6.5 billion and euro3.1 billion respectively. In March, the EU announced plans to similarly support Romania.

(AP)