(1)

By Decision 2013/532/EU (2), the Council has decided to grant mutual assistance to Romania.

(2)

Precautionary medium-term financial assistance for Romania under the balance-of-payments facility for Member States is appropriate under the current circumstances of unstable capital flows affecting in particular emerging markets, risks to the macroeconomic scenario, and remaining vulnerabilities in the banking sector. While under present market conditions Romania does not intend to request the disbursement of any instalment, the precautionary assistance can be expected to help consolidate macroeconomic, budgetary and financial stability and, through the pursuit of structural reforms, increase the resilience and the growth potential of the Romanian economy.

(3)

If negative risks materialise, Romania may not be able to cover its external financing needs from available funding resources. These risks are associated with, among others, important external debt and financial sector roll-overs, a high negative net investment position, and spill-overs from adverse developments in the euro area. In such a stress scenario, the residual financing needs may have to be covered from activating the precautionary medium-term financial assistance.

(4)

It is appropriate to provide Union support to Romania of up to EUR 2 000 million on a precautionary basis under the facility providing medium-term financial assistance for Member States' balance of payments established in Regulation (EC) No 332/2002. That assistance should be provided in conjunction with support from the International Monetary Fund (IMF) through a Stand-by Arrangement in the amount of SDR 1 751,34 million (about EUR 2 000 million, 170 % of Romania's IMF quota), approved on 27 September 2013, which the authorities are also to treat as precautionary medium-term financial assistance. The World Bank has made EUR 1 000 million available under a Development Policy Loan with a deferred drawdown option valid through December 2015. In addition, the World Bank is to continue to provide earlier committed support of EUR 891 million, of which EUR 514 million is still to be disbursed.

(5)

The precautionary medium-term financial assistance should be managed by the Commission which is to agree with the authorities of Romania, after consulting the Economic and Financial Committee (EFC), on the specific economic policy conditions attached to that assistance. Those conditions should be laid down in a Memorandum of Understanding.

(6)

In view of the precautionary nature of the medium-term financial assistance, Romania will not request the disbursement of any instalment under the Union loan, unless difficulties as regards its balance of current payments or capital movements emerge. If Romania makes a request for funding to the Commission, the latter is to decide, after having consulted the EFC, on the activation of the programme and on the amount and timing of such instalments. The detailed financial terms related to possible disbursements is to be laid down in a Precautionary Loan Facility Agreement (PLFA).

(7)

The precautionary medium-term financial assistance should be provided with a view to contributing to the successful implementation of the Government's economic policy programme, and, in this way, should support the sustainability of Romania's balance of payments,