The drop in interests on the banking market and maintaining them at an acceptable level might account for the greatest gain of the extension of the accord with the IMF, since the opening of foreign financing would mean lower pressure by the Finance Ministry upon the domestic market when attracting resources meant to finance the budgetary deficit.
The IMF approved on Wednesday evening the extension of the stand-by accord with Romania to February 28, 2001, and during the following days it will disburse a tranche worth 116 million dollars.
The immediate effects of the accord extension will consist in the release of loan tranches associated with PSAL and ASAL programmes agreed upon with the World Bank. Moreover, the European Union will also grant financing to Romania. These funds jointly amount to 350 million dollars.
Economic analysts say that foreign institutional investors will mainly feel the impact of this decision, as they will perceive the accord in a positive way.
"At the same time, we will be able to operate issues on international capital markets under decent conditions and we will thus no longer worry that we do not have enough money to finance the budgetary deficit," stated Gabriela aendroiu of CAIB Securities.
Stanley Fischer, IMF general director, considers that "sustained application during this year and over the following years of macroeconomic and structural policies settled within the programme concluded with the IMF will be essential in securing sustainable growth."
He says that maintaining the fiscal strategy settled within the programme and the strict observance of its stipulations as regards domestic revenues policy and arrears are crucial in attaining the main macroeconomic objectives and will stimulate financial discipline within economy in general.
"As to structural reforms, it is very important to improve surveillance both in the banking and non-banking financial sector," Fischer added.
At the same time, Prime Minister Mugur Isarescu said that the agreement concluded with the IMF was a good one, as it offered the opportunity of receiving important funds and would contribute to the consolidation of economic growth.
Isarescu said that, from now on, an improvement of the living standard for the population would be noticed. "This increase of the living standard will not be of an ephemeral nature, but a long-lasting one," Isarescu pointed out.
Beyond these positive considerations, economic analysts reckon that the impact of the document approved on Wednesday by the IMF would be diminished as it comes during an electoral year, when foreign investors are waiting until the new government settles in.
"While the reform target of the moment is clear enough, the shadow of elections scheduled for November looms over ties with the International Monetary Fund," analysts from Salomon Smith Barney say.
They consider that there is a substantial difference between the current governmental coalition and Iliescu's party. "PDSR's wish to implement structural reforms is very weak. Even if PDSR governs alone or within a coalition with other parties, the relationship with the International Monetary Fund will be difficult," Salomon Smith Barney analysts maintain.
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