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Balance-of-payments assistance to Romania

Romania's 2013-15 balance-of-payments (BoP) financial assistance programme ended on 30 September 2015. As the second programme (2011-13), it was of precautionary nature and was not drawn upon. Post-programme surveillance started with the end of the programme. It will continue until at least May 2018.

Basic facts about the programme

Post-programme surveillance

Post-programme surveillance (PPS) started on 1 October 2015, with the end of the third programme. It is linked to the loans under the 2009-2011 BoP programme, when disbursements of EUR 5.0 billion were made. EUR 3.5 billion are currently outstanding. PPS will involve a regular flow of information to the European Commission and semi-annual visits to Romania to assess the economic, fiscal and financial situation of the country until at least May 2018, when 70% of the loan under the first programme is expected to be repaid.

During the post-programme surveillance period, the Member State is required to discuss new major policy intentions with the European Commission and with the EFC in case the Commission considers these policy intentions may have the potential to jeopardise the repayment of the financial assistance. In addition, the Commission will continue its close cooperation with the Romanian authorities in the context of the European Semester and the fiscal and macroeconomic surveillance frameworks.

2013 - 2015 BoP pre-cautionary assistance programme

The third EU BoP programme was formally agreed in October 2013 and expired in September 2015. It ran in parallel with an IMF stand-by arrangement (SBA). As with the 2011-13 BoP programme, the 2013-15 programme was treated as precautionary. It was not drawn upon.

The precautionary assistance by the EU amounted to EUR 2 billion, while the IMF contributed up to SDR 1.75 billion (around EUR 2 billion) on the basis of a SBA. The aim of the programme was to support Romania in consolidating macroeconomic, fiscal and financial stability, increasing the resilience and growth potential of its economy, enhancing its administrative capacity, reforming the tax administration, improving public financial management and restructuring state-owned enterprises. Despite some progress in several policy areas, no BoP programme review mission could be finalised during the programme.

The Commission recommends that the Romanian authorities step up the efforts to implement the jointly agreed policy measures within the balance-of-payments programme.

2011 - 2013 BoP pre-cautionary assistance programme

In February 2011 a follow up joint EU/IMF precautionary financial assistance program was requested to support the re-launch of the economic growth with a focus on structural reforms, while improving fiscal sustainability and consolidating financial stability. The World Bank will continue providing earlier committed support to Romania under its development loan programme (DPL3) and support for social assistance and health reforms.

On 12 May 2011, the Council of the European Union adopted a decision to make available a precautionary medium-term financial assistance of up to EUR 1.4 billion for Romania. The EU assistance for Romania under the Balance of Payments (BoP) facility comes in conjunction with IMF support through a Stand-by Arrangement (SBA) in the amount of SDR 3.090 billion (about EUR 3.5 billion, 300% of Romania's IMF quota), approved on 25 March 2011, which the authorities will also treat as precautionary. The World Bank will continue providing earlier committed support of EUR 400 million under its development loan programme and of EUR 750 million of results based financing for social assistance and health reforms.

2009 - 2011 BoP assistance programme

The sudden increase in risk aversion during the financial crisis caused market participants to become increasingly concerned by Romania's large internal and external imbalances in the form of a 5.7% of GDP budget deficit and a 11.6% of GDP current account deficit. As a result, capital inflows fell markedly and the exchange rate of the RON against the euro depreciated by more than 30% between August 2007 and January 2009. Consequently, the Romanian authorities applied in Spring 2009 to the EU, the IMF and other international financial institutions for financial assistance.

In May 2009 an agreement was reached to provide multilateral financial assistance to Romania with an overall amount of € 20 billion, consisting of the following contributors:

  • European Community, € 5 billion under the balance-of-payments assistance programme
  • International Monetary Fund, SDR 11.44 billion (around € 12.95 billion) under an IMF Stand-by arrangement approved on May 4 2009, amounting to 1,110.77 percent of Romania's quota
  • The World Bank, € 1 billion under a Development Policy Loan
  • The EIB and the EBRD, € 1 billion combined.

The EU financial assistance has been disbursed in 5 instalments:

  • € 1.5 billion released 27 July 2009
  • € 1 billion released 11 March 2010
  • € 1.15 billion released 22 September 2010
  • € 1.2 billion released 24 March 2011
  • € 150 million released 22 June 2011

The average interest rate on the amounts disbursed by the European Commission is around 3%, with repayments starting in 2015.

Key events in the BoP assistance programmes for Romania








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