The billion euros secured by Romania last Thursday via the five-year eurobond issue will be frozen at IMF's recommendation, to set up a buffer-fund at the State Treasury which would allow for seasonal pressure to be avoided as far as funding of the budget deficit is concerned.
The Government has made this commitment in the letter of intent sent to the Fund at the beginning of February, based on which tranches III and IV of the loan were released, worth 2.45 billion euros. This was the last time that the IMF board agreed for half the tranches to be allocated for direct funding of Romania's budget deficit, by making an exception to the rule of transferring the money into the foreign exchange reserve.
The deficit financing need exceeds 7 billion euros this year, and Romania remains exposed to fluctuations in the perception of foreign investors.
Finance Minister Sebastian Vladescu says the value of the eurobond issue was set at one billion euros in order to give a clear signal to the market, as this was the first issue of this value launched in Romania, as well as in order for the fixed interest rate not to exceed 5% a year.
"We remained at 1 billion euros in order to have a round sum, which has an image effect at market level: Romania issues five-year eurobonds worth 1 billion euros for the first time. In addition, we wanted to charge a coupon within 5%, i.e. an overall cost of 5.20%, and a difference up to 1.2-1.3 billion euros would not have been significant," Vladescu told ZF.
The billion euros secured by Romania last Thursday via the five-year eurobond issue will be frozen at IMF's recommendation, to set up a buffer-fund at the State Treasury which would allow for seasonal pressure to be avoided as far as funding of the budget deficit is concerned.
The Government has made this commitment in the letter of intent sent to the F
