The Finance Ministry could offer up to 5% in yearly interest for euros to the banks participating in the up to one billion euro credit to be arranged as a club loan in about two weeks, banking sources say.

The price would be the sum total of the EURIBOR benchmark rate, around 1%, plus the CDS level, which went up to about 4% as a result of a new worsening of the risk perception of Romania. The Finance Ministry needs this money to fuel its effort to reduce the backlog of VAT reimbursement.

This operation of the Finance Ministry will absorb part of the two billion euros that became available after the two cuts of the mandatory minimum reserves made by the NBR (the second of which will come into force on July 24). By exchanging the euros of the loan obtained by the Finance Ministry, NBR should then recover some of the foreign currency reserve lost as a result of the relaxation of the minimum reserves.

The option to get financing via a "club loan", which is more flexible and simpler than a syndicated loan, could be used several times during one year, depending on the needs of the Finance Ministry, which are rising as a result of the fast-paced decline of budgetary revenues. The Treasury has been resorting to the market to get cash every day since last Friday.

On the other hand, the Finance Ministry keeps the option to release eurobonds open, which may happen in September, when the holiday ends.

With the massive contraction of lending, big banks required during the talks with IMF in Brussels, as well, to have a mechanism put in place so that the foreign currency available could be invested in the country instead of withdrawn from the market. Some banks, however, are still unhappy that the receivables arising from a club loan are not eligible for cash from the NBR, so that talks are still going on.

At the same time, the Finance Min