Romania In “Close Dialogue” With IMF, Bulgaria To “Seek Advice”

Well, only seconds after I jokingly suggest in my last post that Bulgaria may be talking to the IMF even as I write, Bloomberg flash up on my screen that Romania already are – although, not for a loan, please note. But, they would say that, now wouldn’t they?

Romania is in “close dialogue” with the International Monetary Fund, though it is not asking for a loan from the lender that has offered support for Ukraine and Hungary.

“We do not have discussions about such financial support under way with Romania, but we maintain a close policy dialogue with the Romanian authorities,” the IMF said in an e-mailed statement today. “Decision makers need to send a clear signal to the markets with wage and fiscal policies that are realistically attuned to a very difficult external environment.”

This news today is not entirely unexpected, since only yesterday S&P’s downgraded Romanian foreign currency debt to what is effectively “junk bond” status.

Romania’s foreign-currency debt rating was lowered to junk by Standard & Poor’s as the global financial crisis weighs on the Balkan nation’s economy and the government boosts spending before parliamentary elections.

The rating was cut to BB+, one step below investment grade, from BBB-, with a “negative” outlook, S&P said in a statement from London today.

“Difficult global and financing condition, accompanied by expansionary fiscal and income policies ahead of the upcoming elections, have progressively heightened downside economic risks,” the ratings company said in the statement.


Three hours later I find that the Bloomberg story has been updated, and now indeed, even as I was writing my earlier post, Bulgaria was indeed busy consulting:

Bulgarian Finance Minister Plamen Oresharski will meet with IMF officials at the end of this week “as part of consultations on general policies and coordination of projections,” he said in Sofia today. The country, Romania’s southern neighbor, has sufficient fiscal reserves, exceeding government debt, and “has no intention” to borrow from the IMF, he added.

OK, more on all this as I get some time and my breath back.

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About Edward Hugh

Edward 'the bonobo is a Catalan economist of British extraction. After being born, brought-up and educated in the United Kingdom, Edward subsequently settled in Barcelona where he has now lived for over 15 years. As a consequence Edward considers himself to be "Catalan by adoption". He has also to some extent been "adopted by Catalonia", since throughout the current economic crisis he has been a constant voice on TV, radio and in the press arguing in favor of the need for some kind of internal devaluation if Spain wants to stay inside the Euro. By inclination he is a macro economist, but his obsession with trying to understand the economic impact of demographic changes has often taken him far from home, off and away from the more tranquil and placid pastures of the dismal science, into the bracken and thicket of demography, anthropology, biology, sociology and systems theory. All of which has lead him to ask himself whether Thomas Wolfe was not in fact right when he asserted that the fact of the matter is "you can never go home again".