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Romania calls on IMF emergency funding

March 26, 2009

In a move that brings the seventh county under emergency aid from the IMF in Eastern Europe, Romania calls for €20 Billion in aid from the IMF. At least the IMF is using slightly less difficult terms now…

Bucharest’s property market has crashed after a boom financed by cheap mortgages in euros and Swiss francs. An 18pc fall in Romania’s leu since September has left borrowers facing a sharp jump in debt payments.

Capital Economics says the economy is likely to contract by 7.5pc this year, with no recovery until well into 2010. The country built up a current account deficit of 16pc of GDP last year, leaving it exposed as foreign investors pull out of the area.

The aid package comes with strings attached. Romania must push through austerity measures and cut its budget deficit to 3pc over the two next years. There are doubts over the willingness of premier Emil Boc to abide by any conditions. Romania has a history of breaching IMF deals.

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