Press Release: IMF Approves Extension and Augmentation of Stand-By Credit to Romania

December 21, 1995

The International Monetary Fund (IMF) today approved a request by the Romanian Government to extend the current stand-by arrangement through April 1997 and to augment the amount available under it by SDR 188.525 million (about $280 million), in support of Romania's adjustment and structural reform policies. The IMF's Executive Board took the decision in conjunction with the completion of the first program review under the stand-by arrangement for SDR 131.97 million (about $196 million) approved on May 11, 1994 (see Press Release No. 94/34).

Economic performance in Romania during 1994 was marked by a sharp improvement in confidence. Developments in the first nine months of 1995 presented a more contrasted picture, as the further acceleration in growth was accompanied by the reemergence of balance of payments pressures. GDP growth accelerated to some 5 percent, unemployment began to decline, and recorded consumer price inflation slowed to an annual rate of less than 30 percent from 62 percent a year earlier. However, the current account deficit is estimated to have widened to 4.7 percent of GDP in 1995 from 1.8 percent of GDP in 1994. The economic program for 1996 is designed to achieve a growth rate of 4 percent, a reduction in consumer price inflation to less than 20 percent, a narrowing of the current account deficit to 3.4 percent of GDP, and a significant increase in the foreign exchange reserves of the National Bank of Romania by year-end.

Romania joined the IMF on December 15, 1972, and its quota1 is SDR 754.1 million (about $1,122 million). Its outstanding use of IMF credit currently totals SDR 644 million (about $958 million).

1. A member's quota in the IMF determines, in particular, the amount of its subscription, its voting weight, its access to IMF financing, and its allocation of SDRs.

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