Romania is in “advanced talks” with the World Bank for a 1 billion-euro ($1.3 billion) loan to shield the nation against the sovereign debt crisis, Finance Minister Bogdan Dragoi said.
The Washington-based lender’s board of directors will probably meet in early June to discuss the precautionary loan, which Romania doesn’t plan to use, Dragoi said in an interview in Bucharest today. A pre-condition for the loan is the overhaul of the country’s tax agency, he said.
“We don’t plan to draw on the funds, we’ll keep the loan as a buffer amid the economic crisis considering the latest news from Spain and Italy,” Dragoi said. “It’s good to have it there, on top of the four-month financing buffer and the other loans.”
Europe’s debt woes have returned to the fore with Spanish and Italian bond yields rising after Spain announced on March 2 that it wouldn’t meet a European Union-approved deficit target. The World Bank credit would be Romania’s third backstop against the crisis after 5 billion euros were secured last year in deals with the International Monetary Fund and the EU. Romania hasn’t drawn any funds so far.
The new loan will probably have a maturity of three years, Francois Rantrua, the World Bank’s country manager, said in a Jan. 26 interview.
Dragoi also said the ministry hasn’t yet decided whether to roll over 700 million euros in euro-denominated bonds due on May 8. “We’re very flexible, considering we’ve already issued dollar bonds twice this year,” he said.
Romania’s economy probably expanded on an annual basis in the three months through March, even after disruptions from cold weather, Dragoi said. The nation is due to report gross domestic product data for the period on May 15. The minister declined to comment on quarterly economic figures.
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