## IMF Survey: Romania Receives Support from IMF to Counter Crisis

_IMF News, May 4, 2009_

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**Canonical URL:** [IMF Survey: Romania Receives Support from IMF to Counter Crisis](https://www.imf.org/en/news/articles/2015/09/28/04/53/soint050409a)

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## Bibliographic details
- Published: May 4, 2009

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### Economic background and crisis dynamics
- Romania experienced very strong growth until 2008: GDP growth averaged over 6½ percent per year from 2003 to 2008.
- Growth turned sharply negative in late 2008: growth slowed from an average of 9 percent during the first three quarters of 2008 to a 13 percent decline in the fourth quarter.
- Key domestic vulnerabilities:
  - Large current account deficit as imports outstripped exports.
  - Heavy dependence on foreign capital inflows and foreign direct investment, including foreign banks’ subsidiaries.
  - Rapid increase in private sector borrowing, with over half of domestic private credit in foreign currency.
- External shock transmission:
  - Global credit crunch reduced capital inflows.
  - The leu depreciated by more than 15 percent against the euro since October 2008, raising the cost of servicing foreign-currency loans for consumers and companies.
- Resulting effects: output is falling, exports have dropped sharply, and large capital inflows that financed the boom have dwindled.

### Reasons for seeking IMF support
- Combined pressures from the worldwide slump and Romania’s internal economic weaknesses left limited policy space:
  - Large pre-crisis fiscal deficits reduced maneuverability during the downturn.
  - Reforms to improve productivity and flexibility had stalled.
- Romanian authorities sought a comprehensive policy package to bolster resilience as regional conditions worsened.
- Multilateral support: In March (2009), the IMF, together with the European Union, the World Bank, and other multilateral organizations, committed to supporting the authorities’ efforts.

### IMF program approval, size, and objectives
- Timeline and approvals:
  - IMF Survey online: May 4, 2009.
  - IMF’s Executive Board approved a Stand-By Arrangement in the amount of $17.1 billion (noted separately).
  - The IMF’s Executive Board has approved a 24-month Stand-By Arrangement for €12.95 billion as part of a total €20 billion financial support package.
- Program aims:
  - Help cushion the effects of the downturn through financial support.
  - Support policy changes to avoid the worst consequences of the crisis.
- Three main program areas:
  - Fiscal consolidation.
  - Banking reform.
  - Reducing inflation to help restore financial stability.

### Key statistics and figures (preserved exactly)
- $17.1 billion (Stand-By Arrangement amount noted).
- 24-month Stand-By Arrangement for €12.95 billion.
- Part of a total €20 billion financial support package.
- GDP growth averaged over 6½ percent per year from 2003 to 2008.
- Average of 9 percent growth during the first three quarters of 2008.
- 13 percent decline in the fourth quarter of 2008.
- Leu depreciation of more than 15 percent against the euro since October 2008.
- Over half of domestic private credit is in foreign currency.

*IMF Survey online: May 4, 2009 — Interview with Jeffrey Franks, IMF mission chief for Romania.*

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## References

- [https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)
- [PRESS CENTER](http://presscenter.imf.org/)
- [IMF Survey Interview](https://www.imf.org/en/news/search)
- [Watch the video in English](https://www.imf.org/external/mmedia/view.asp?eventid=1475)
- [Watch the video in Romanian](https://www.imf.org/external/mmedia/view.asp?eventid=1496)
- [Press release](https://www.imf.org/external/np/sec/pr/2009/pr09148.htm)
- [IMF Board assessment](https://www.imf.org/external/)
- [IMF outlines Romania loan plan](https://www.imf.org/external/pubs/ft/survey/so/2009/CAR032509A.htm)
- [Romania and the IMF](https://www.imf.org/external/country/rou/index.htm)
- [Key issues: emerging markets](https://www.imf.org/external/np/exr/key/emkts.htm)
- [Emerging markets face pressure](https://www.imf.org/external/pubs/ft/survey/so/2009/NEW031909B.htm)
- [IMF helps emerging Europe](https://www.imf.org/external/pubs/ft/survey/so/2009/INT011409A.htm)
- [Emerging market currency risk](https://www.imf.org/external/pubs/ft/survey/so/2008/CAR102808A.htm)
- [Emerging Europe’s income gap](https://www.imf.org/external/pubs/ft/survey/so/2008/CAR080108C.htm)
- [IMF’s emerging market loans](https://www.imf.org/external/pubs/ft/survey/so/2008/POL102908A.htm)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2015/09/28/04/53/soint050409a_