Financiarul

The 19.95 billion euros agreed upon under a stand-by arrangement between the International Monetary Fund (IMF) and Romania will be paid out in eight instalments, in accordance with the outcome of quarterly reviews, read the Stand-By Arrangement and the Technical Memorandum of Understanding released by the IMF.

The first instalment, worth 4.37 billion SDRs (special drawing rights), or nearly 5 billion euros, was paid out on May 6, immediately as the IMF Board of Directors approved the Stand-By Arrangement.

Based on the situation resulting from the first review scheduled for end-June, a second tranche, worth 1,718 million SDRs will be paid out on September 15, 2009.

If Romania meets its pledges to the IMF under the Stand-By Arrangement, and the end- September review reflects that, Romania will be made available a third tranche, worth 1,409 SDRs on December 15, 2009.

The third review is scheduled for late 2009, and if the performance criteria are met, the fourth tranche, worth 766 million SDRs will follow on March 15, 2010.

The next reviews of the IMF experts are scheduled for end-March, end-June, end-September and end-December 2010.

If Romania manages to fully met the performance criteria agreed upon under the Stand-By Arrangement, the remaining tranches of the arrangement will be made available to Romania on June 15, September 15 and December 15, 2010.

They will be worth 768 million SDRs, 769 million SDRs and again 769 million SDRs, respectively.

The last tranche, worth 874 million SDRs, is scheduled to reach Romania on March 15, 2011 and will break the mould of the previous arrangements between Romania and the IMF after 1990, as it will be the second to be carried through.

By the end of the arrangement, the IMF exposure to Romania is projected to be about 10 percent of GDP, nearly 40 percent of gross reserves, higher than the average for recent exceptional access cases.

While this exposure is large, the associated risks to servicing such an exposure are mitigated by the relatively low level of public debt.

Direct public indebtedness (outside borrowing from the IMF) is expected to remain low (under 26 percent of GDP), with public external debt peaking at around 10 percent of GDP at end-2010, reads the document released on Wednesday by the IMF.

Total external debt is projected to increase to about 68 percent of GDP at end-2010 from 53 percent at end-2008, but the declining current account deficit and a return to economic growth would gradually reduce it to manageable levels in the medium term.

IMF experts believe that Romania’s strong political commitment to the IMF-supported Stand- By Arrangement program and its excellent track record servicing external obligations, also provide comfort that it will fulfil its financial obligations to the Fund in a timely manner.