Financial assistance to Romania

SUMMARY OF:

WHAT IS THE AIM OF THESE DECISIONS?

They aim to provide financial assistance to Romania.
The European Union (EU) and the International Monetary Fund (IMF), with the support of other international organisations provided financial assistance to Romania between 2009 and 2015.
The basis for the EU’s action is Regulation (EC) No 332/2002 allowing it to provide medium-term financial assistance to EU countries not in the euro area that have difficulties in their balance of payments.

KEY POINTS

In 2009, the EU agreed Romania should receive up to €20 billion in financial assistance for 2009-2011. In accordance with Regulation (EC) No 332/2002, assistance was linked to the adoption by Romania of economic policy measures designed to re-establish a sustainable balance of payments.
The funding was provided by:
- EU: €5 billion under its of balance of payments assistance programme;
- IMF : around €12.95 billion on a stand-by-arrangement;
- World Bank : €1 billion;
- European Investment Bank and the European Bank for Reconstruction and Development: €1 billion combined.
In 2011, the EU agreed to provide Romania with precautionary financial assistance of up to €1.4 billion for 2011-2013. The decision acknowledged that:
- Romania would not request the payment of any instalment of the funding unless it had difficulty with its balance of current payments or capital movements;
- the European Commission would consider any Romanian request to receive all or part of the loan in the light of the government’s implementation of its economic reform programme;
- the assistance was a joint effort with the IMF, which provided around €3.6 billion under a precautionary stand-by arrangement,
- the World Bank promised further financial support.
In 2013, the EU agreed a new balance of payments precautionary programme for Romania for 2013-2015. It promised €2 billion and the IMF a similar amount. This was designed to support the country to:
- consolidate macroeconomic, fiscal and financial stability;
- increase the economy’s resilience and growth potential;
- enhance administrative capacity;
- reform the tax administration, improve public financial management and restructure state-owned companies.
The financial support under the 2011-2013 programme and the 2013-2015 programme was never drawn on.
With the end of the third financial assistance programme on 30 September 2015, the EU began its post-programme surveillance on 1 October 2015. This surveillance:
- focuses on the 2009-2011 balance of payments programme under which €3.5 billion of the €5 billion loans paid out remain outstanding;
- involves regular visits to Romania to assess the country’s economic, fiscal and financial situation;
- is likely to last until May 2018 when 70% of the original loan is expected to be repaid.

FROM WHEN DO THE DECISIONS APPLY?

Council Decision 2009/459 took effect on 11 May 2009.
Council Decision 2011/288/EU tookeffect on 13 May 2011.
Council Decision 2013/531/EU took effect on 25 October 2013.

BACKGROUND

In February 2002, the Council of the EU gave the EU the power to grant loans to member countries experiencing, or threatened with, difficulties in their balance of payments or capital movements.
This financial assistance is only available to countries which do not use the euro.
Romania first applied for the assistance in 2009 after its currency had fallen by 30% against the euro during the previous 15 months and its budget and current account deficits had increased rapidly due to the financial crisis.
For more information, see:
- ‘Balance-of-payments assistance to Romania’ on the European Commission's website.

MAIN DOCUMENTS

Council Decision 2009/459/EC of 6 May 2009 providing Community medium-term financial assistance for Romania (OJ L 150, 13.6.2009, pp. 8–10)

Successive amendments to Decision 2009/459/EC have been incorporated in the original text. This consolidated version is of documentary value only.

Council Decision 2011/288/EU of 12 May 2011 providing precautionary EU medium-term financial assistance for Romania (OJ L 132, 19.5.2011, pp. 15–17)

Council Decision 2013/531/EU of 22 October 2013 providing precautionary Union medium-term financial assistance to Romania (OJ L 286, 29.10.2013, pp. 1–3)