Abstract
Romania, a member of the EU, was among the first countries to turn to the IMF for assistance. Since then, the Romanian economy has experienced positive changes and ranks among front runners of economic growth in the EU. In light of the development, it has become an issue of interest to investigate to what extent and how the IMF firstling collaboration with the EU affected the Romanian economy and to appraise the compliance of the government to the underlined measures. At the same time, in context to the case of Romania, the chapter aims to highlight the main actions of the IMF, which could be helpful for prevention or mitigation of a new crisis. The propensity score matching method was used to identify a country most similar to Romania and one that has not claimed IMF assistance—Bulgaria. Comparative analysis of major economic indicators over a 5-year span in Romania and Bulgaria suggests the effectiveness of IMF measures. The novelty of the article is in the results, which underline the success of conditional lending on specific macroeconomic indicators in Romania. Both EU states and other governments cooperating with the IMF might want to take the positive findings into consideration.
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Notes
- 1.
The IMF offers two types of loans: concessional and non-concessional. Concessional loans are granted to low-income countries via the Extended Credit Facility (ECF), the Standby Credit Facility (SCF) and the Rapid Credit Facility (RCF) with zero interest rates until the end of 2014. Non-concessional lending comes mainly through Stand-By Arrangements (SBA), the Flexible Credit Line (FCL) and the Precautionary and Liquidity Line (PLL). All these facilities are subject to the IMF’s market-related interest rate and have attached conditions (IMF 2014b).
- 2.
New Arrangement to Borrow (NAB) is a collective agreement between 38 member countries, financial institutions and the IMF, whereby the IMF lends from the other member nations and institutions in case its normal funds fall short of the borrower’s needs. Expended to SDR $367.5 billion in March, 2011, it came into effect shortly thereafter.
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Ohanyan, G. (2016). IMF and Recent Crisis Prevention: Evidence from Romania. In: Bilgin, M., Danis, H. (eds) Entrepreneurship, Business and Economics - Vol. 2. Eurasian Studies in Business and Economics, vol 3/2. Springer, Cham. https://doi.org/10.1007/978-3-319-27573-4_45
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