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Tax rises hit Greece as EU meets on debt crisis
ATHENS, Greece – A wave of new tax hikes hit Greece on Monday, raising the cost of consumer goods despite recession and high unemployment, as European Union finance ministers gathered in Brussels to discuss the country's debt crisis.
The center-left government has increased the main sales tax from 19 to 21 percent, as part of a euro16 billion ($22 billion) austerity package intended to cut the budget deficit by almost a third this year.
The tax hike raised the cost of fuel and most consumer goods and services, although many retailers have said they will try to minimize the effect on shelf prices.
Central Athens greengrocer Vangelis Tangalos said the sales tax increase would further damage weak sales.
"We're already 30 to 40 percent down," he said. "Now with the increase there will be even more of an effect."
Greece will present the first results of its austerity measures at the EU ministerial meetings Monday and Tuesday, and says it is looking for political rather than financial backing to pull through a crisis that has hammered Europe's common currency and alarmed global markets.
Both Athens and Berlin have dismissed media reports that the finance ministers would decide to extend financial aid to Greece. As Europe's largest economy, Germany would be deeply involved in any bailout, and has strongly resisted the idea.
EU officials said Saturday the union has developed a set of options to help Greece, but that Athens would have to arrange for possible loan guarantees with each individual government no fax payday loan.
Greece's finance ministry says the austerity program, which also involves civil service wage cuts and freezes on hirings and pensions, "appears sufficient" to meet budget saving targets.
The cutbacks have angered unions, which responded with strikes and demonstrations that were marred by extensive riots. Opinion polls show the public is increasingly unwilling to brook the measures.
While one in two Greeks agreed that the austerity package was "generally in the right direction" to help government finances, 42 percent disagreed, according to a survey published in Sunday's Ethnos newspaper. Nearly 66 percent said the cutbacks were unfair.
A poll in the Sunday Eleftherotypia newspaper found that 51 percent of respondents were prepared to participate in labor action against retirement age increases and cuts in wages and pensions.
State power corporation workers will be on strike Tuesday and Wednesday, while petrol station owners, state hospital nurses and teachers are also planning walkouts this week.
Greek bailout tops EU finance ministers agenda
BRUSSELS (Reuters) – Finance ministers from countries using the euro hope to agree on Monday on a way of providing heavily indebted Greece with financial aid, despite French doubts that a deal will be reached.
European policymakers are discussing how to help Greece and protect the 16-country currency zone but so far have not backed promises of political support with financial aid. Germany, Europe's biggest economy, has resisted bailout pledges.
European Union leaders have welcomed austerity measures announced by the Greek government and a poll on Sunday showed most Greeks saw them as a step in the right direction, despite the street protests they have provoked.
A senior EU source told Reuters at the weekend that among the means being considered to help Greece were bilateral loans and loan guarantees.
French Economy Minister Christine Lagarde said she did not expect any figure for aid to be announced at Monday's monthly meeting of the Eurogroup finance ministers in Brussels.
"I'm certainly not expecting any decision being made, or any button being pressed, or any button being selected to be pressed, because it's totally premature," she told reporters in New York.
Despite this, she said Greece had "delivered enormously" with its austerity steps which include promised spending cuts equal to 2 percent of gross domestic product. Under EU rules, neither the bloc as a whole nor individual member states can assume the debts of other countries.
Greece should show it had taken steps to get its public finances in order before external help could be given, Ewald Nowotny, a member of the governing council of the European Central Bank, said in on Austrian television on Sunday.
"Those who are members of the club should keep to the rules," Nowotny said.
On Saturday, Britain's Guardian newspaper quoted sources as saying Monday's meeting would agree to make up to 25 billion euros of support available best humidifier. The senior EU source told Reuters no figures were likely at this stage.
FRAMEWORK MECHANISM
"I think we should be able to agree on principles of a euro area facility for coordinated assistance. The (executive) European Commission and the Eurogroup task force would have the mandate to finalize the work," the source said.
He said they would discuss the principles and parameters of a facility or mechanism that could be activated if needed and requested, but no figure had been agreed.
"You would have a framework mechanism and you would have blank spaces for the numbers because there has been no request (from Greece) yet," the source said.
Greece hopes to reduce its budget deficit this year to 8.7 percent of GDP from 12.7 percent in 2009, a plan that has led to protests and strikes .
However, just over half the 1,008 people surveyed for the Greek newspaper Ethnows said last week's 4.8 billion euro ($6.6 billion) package went in "the right direction," while 41.9 said it did not. Many said unions should tone down their opposition.
The austerity plan has reduced market concern over whether Greece will be able to service its debt and helped Athens sell its bonds with ease on debt markets earlier this month.
Policymakers are still searching for ways of making its cost of borrowing -- still far above that of other Europeans -- more sustainable.
They are also concerned that the problems in Greece could undermine confidence in the euro and spread to other heavily indebted euro zone countries such as Portugal or Spain.
(Reporting by Pete Harrison, editing by Timothy Heritage)
Crude Ends Lower After U.S. Sentiment Data
NEW YORK -- Crude oil retreated on Friday, giving it a slightly loss for the week, as a report that showed U.S. consumers were less upbeat in March offset a forecast for higher global oil demand and an unexpected rise in U.S. retail sales in February. Crude oil for April delivery ended down 87 cents, or 1%, at $81 cash advance today.24 a barrel at the New York Mercantile Exchange. For the week, crude lost 0.4%.
Mutual Fund Investors Still Wary Of Stocks
NEW YORK -- Ask most financial professionals and they'll tell you the same thing: Investors flee the stock market and then jump back in, but too late for their own good.
The evidence of the past year seems to support that view, as new money coming to stock mutual funds has been negligible even as returns have been among the best on record. An influx into stocks in the coming months would suggest investors once again waited too long.
But something else may also be at work. While the Standard & Poor's 500-stock index (SPX) is up almost 69% in the past 12 months, the losses caused by the market crash were the worst in at least two generations. And despite the new bull market, many investors -- indeed, many mutual funds -- are still below their pre-crash peak.
"There's still some sensitivity to how much was lost [in the crash] -- investors are still opening their 401(k) statements and seeing losses," said Todd Rosenbluth, mutual fund analyst at Standard & Poor's.
The question is whether the losses were so big that they scared investors away from stocks not just for the next few months, but for years to come. In other words, perhaps the usual pattern of coming late to the party has changed.
"I don't know if we're seeing the demise of actively-managed mutual funds -- if we are seeing a big change -- but a lot of people seem to have decided to stay away from stock funds," said Tom Roseen, senior analyst at research firm Lipper Inc.
Figures from Lipper back this view. From March 1, 2009 through Jan. 31, stock mutual funds saw net inflows of $21.22 billion -- trivial for a sector that has about $4 trillion in assets. In the same period, bond funds saw net inflows of $328 billion.
Choosing carefully
So far, so gloomy. But those numbers don't tell the whole tale. While stock mutual funds saw poor inflows in the first 11 months of the bull market, some categories fared much better than others.
International stock funds saw $46.5 billion in net inflows -- fairly substantial flows for a category that had about $760 billion in total assets at the end of January, according to Lipper. Gold and natural resources funds, meanwhile, only saw net outflows in one month during the period -- July -- and the $40 billion category ended the 11 months with net inflows of $4.2 billion.
The bulk of the outflow has been from U.S. stock funds, which means that investors have been withdrawing money out of the market even as prices have risen sharply. While surprising, it may suggest that investors are being careful in how they allocate cash.
As Roseen noted, while large-cap U.S. stocks are often seen as a safe harbor in a recession, the recent crisis quashed that perception. A weak dollar, higher prices for gold and natural resources and bargain-hunting may have led people into alternatives such as developed and emerging international markets.
"After the routing the international market took in 2008, I think many investors saw some unique opportunities to buy securities at deeply discounted prices. For others, it might have been simply performance chasing -- after all Latin American Funds were up 113% in 2009 and emerging markets funds climbed 76%," said Roseen.
The overall flow numbers also fit a pattern. This is the fourth bull market since 1987, according to Standard & Poor's Equity Research. Each time, net inflows into stock funds have been slow to get going before jumping in the second year installment payday loans.
In the first 12 months of 1987's bull market, for example, stock funds saw $16 billion in net outflows, but that was followed by a cascade of more than $4 billion in new money over the following year. A similar surge in 1990's bull market: Net inflows were roughly $26 billion in the first year and more than $70 billion over the next year. And the first year of the bull market that began in late 2002 saw about $90 billion in net stock fund inflows, jumping to $190 billion in the second year.
The combination of inflows into some categories together with bull market history does suggest that it would be premature to write off interest in stock funds. But there is another factor to consider: the threat to traditional funds from exchange-traded funds.
From March 2009 through January, stock ETFs saw net inflows of $14 billion. That was despite net outflows of more than $18 billion in January, which was likely due to investors' tax maneuvering. Take out January's numbers and stock ETFs saw almost $33 billion in net flows in the first 10 months of the bull market, a sizeable chunk of the roughly $600 billion in all stock ETFs.
Roseen said this suggests some people feel let down by active management and are choosing passive, index-linked funds. It also might be that the liquidity of ETFs, which are bought and sold on an exchange, appeals to skittish investors.
"I think a lot of people look at it and they want to be able to get in and out of the market quickly, and ETFs are more nimble," he said.
Lonely bull
Will investors return this year in greater numbers, repeating the pattern of previous bull markets?
Much depends on whether the economy shows clearer signs of being on the mend. Unemployment is hovering at about 10%, the consumer sentiment index fell in February and both new-home sales and pending home sales dropped in January. Against this backdrop, it's not hard to see why many investors don't trust the market rally.
"We don't foresee a strong rebound in the economy; we think it'll just bounce along, and there'll be good days and bad days," said Barry James, president and chief executive of James Investment Research, an Alpha, Ohio-based investment advisor with about $2 billion in assets under management. "There's a disconnect [between the market and the economy] and I think we're going to see another major shift out of stock funds."
Moreover, he added, much of the bull market so far has been fueled by low-quality stocks and low trading volume, two signs that any further rebound might not be overly generous. Read about where to invest in the bull's second year.
James added that in the past 12 months, for 386 companies that are in the S&P 500 and which have reported this year, per-share earnings are down 10.2% on average, while sales are down 7.1%. Overall, 221 companies had negative net income growth. None of these factors suggest a bold uptick in the market's fortunes, he said.
James said his relatively bearish view is reflected in his balanced fund, James Balanced: Golden Rainbow Fund (GLRBX) , which today has just 40% of its portfolio in stocks.
Added Roseen, "I think investors will be cautious in 2010. While fourth-quarter earnings beat expectations, the economy still seems to be causing some fits and starts."
Three Banks Back LSEs Turquoise
LONDON -- The London Stock Exchange Group said it's sold 9% of its stake in the holding company for the merged Turquoise and Baikal businesses, to three global banking clients, Barclays , J.P. Morgan Cazenove and Nomura . They each bought 3% stakes for 1 million pounds in cash each. This brings the total number of shareholders in Turquoise, a multilateral trading facility for pan-Europe stocks to twelve global investment banks and LSE paydayloans.
AIG Selling 9.19 Million Shares Of TRH Stake
NEW YORK -- American International Group said Friday it'll sell 9.19 million shares it holds in Transatlantic Holdings Inc. in a stock offering. Based on TRH's closing price of $53.76 a share on Thursday, the stock sale would fetch about $494 million. The offering represents AIG's remaining 13.8% stake in the company, which is owned by an AIG unit, American Home Assurance Co. (AHAC). Separately, Transatlantic Holdings said it would buy up to 2 million shares of its own stock, valued at about $108 million paydayloans. AIG's AHAC unit plans to offer the TRH shares on or prior to March 9, concurrent with TRH's addition to the S&P Midcap 400 Index.
Trusted Adviser or Stock Pusher? Finance Bill May Not Settle It
You have probably seen the television commercial, the one where you seem to be watching an intimate conversation between family members. But at the end, you learn that the conversation was actually between a broker and his client.
Skip to next paragraph Your Money GuidesFinancial Planners »Brokerage and Bank Accounts » Enlarge This Image Daniel Rosenbaum for The New York TimesDavid B. Armstrong, a former broker at Merrill Lynch, said his training focused on selling rather than evaluating investments.
Related White House Offers Bill to Restrict Big Banks’ Actions (March 4, 2010) Enlarge This Image Robert K. Jodan/University of MississippiMercer Bullard, a law professor and adviser to regulators, said brokers did not have to disclose upfront how they were paid.
The advertisement is meant to evoke the idea of financial adviser as confidant, and is part of brokerage firms’ broader effort in recent years to recast their image — from mere stock pushers to trustworthy advisers.
But in interviews, former and current brokers said the ad told only part of the story. All said their jobs depended less on giving advice and more on closing sales. The more money they brought in, the more they, and their firms, would earn.
“I learned a lot about being a good salesman at Merrill,” said David B. Armstrong, who left Merrill Lynch after 10 years and with partners started an advisory firm in Alexandria, Va. “The amount of training I sat through to properly evaluate investment opportunities was almost nonexistent relative to the training I got on how to sell them.”
While the issue of broker responsibility is not new, it has resurfaced as Congress has been considering financial overhaul legislation. In his original draft, Senator Christopher J. Dodd, chairman of the Senate Banking Committee, proposed requiring brokers to put their customers’ interests first — what is known as fiduciary duty — when providing investment advice. But in recent weeks, the chances of this proposal’s making it into the bill began to dim.
Senator Tim Johnson, a South Dakota Democrat on the Banking Committee, has proposed an 18-month study of the brokerage and investment advisory industries, an effort that would replace Senator Dodd’s provision.
Imposing a fiduciary requirement could have an impact on investment firms’ profits. Guy Moszkowski, a securities industry analyst at Bank of America Merrill Lynch, said that the impact of a fiduciary standard was hard to determine because it would depend on how tightly the rules were interpreted. But he said it could cost a firm like Morgan Stanley Smith Barney as much as $300 million, or about 6 to 7 percent of this year’s expected earnings, if the rules were tightly defined. “It’s very nebulous, but I think that is a reasonable estimate,” he added.
In a research report about Morgan Stanley last year, Mr. Moszkowski wrote, “Financial advisers will be expected to take into account not just whether a product or investment is suitable for the client, but whether it is priced favorably relative to available alternatives, even though this could compromise the revenue the financial adviser and company could realize.”
Technically speaking, most brokers (including those who sell variable annuities or the 529 college savings plans) are now only required to steer their clients to “suitable” products — based on a customer’s financial situation, goals and stomach for risk.
But Marcus Harris, a financial planner who left Smith Barney 10 months ago to join an independent firm in Hunt Valley, Md., said the current rules leave room for abuse. “Under suitability, advisers would willy-nilly buy and sell investments that were the flavor of the month and make some infinitesimal case that they were somehow appropriate without worrying,” he said.
Kristofer Harrison, who spent a couple of years at Smith Barney before leaving to work as an independent financial planner in Clarks Summit, Pa., said the fact that brokers were paid for investments — but not advice — also fostered the sales mentality.
“The difficulty I had in the brokerage industry” he said, “is that you don’t get paid for the delivery of financial advice absent the sale of a financial product bad credit payday advance. That is not to say the advice I rendered was not of professional quality, but in the end, I always had the sales pitch in the back of my mind.”
Mr. Armstrong, Mr. Harris and Mr. Harrison all said they had decided to become independent because they felt constrained by their firms’ emphasis on profit-making and their inability to provide comprehensive advice.
A current branch manager of a major brokerage firm who did not want to be identified because he did not have his employer’s permission to speak to the media, confirmed that “you are rewarded for producing more fees and commissions.” While he said that “at the end of the day, I think that the clients’ interests are placed first and foremost by most advisers,” he added that “we are faced with ethical choices all day long.”
Brokers are typically paid a percentage of fees and commissions they generate. The more productive advisers at banks and big brokerage firms could collect 50 percent of the fees and commissions they generate, said Douglas Dannemiller, a senior analyst at Aite Group, a financial services research group.
The firms may also make money through other arrangements, including what is known as revenue sharing, where mutual fund managers may, for instance, agree to share a portion of their revenue with the brokerage firm. By doing this, the funds may land on the brokerage firm’s list of “preferred” funds. Some brokerage firms, including Merrill Lynch and Morgan Stanley Smith Barney disclose their revenue sharing information on their Web sites, or at the point of sale. Edward Jones discloses it as well, as the result of a settlement of a class-action lawsuit. UBS and Wells Fargo Advisors declined to comment on whether it discloses this information.
Unlike fiduciaries, brokers do not have to disclose how they are paid upfront or whether they are have incentives to push one investment over another. “The way the federal securities law regulates brokers, it does not require the delivery of information other than at the time of the transaction,” said Mercer E. Bullard, an associate professor at the University of Mississippi School of Law who serves on the Securities and Exchange Commission’s investment advisory committee.
The legislative language on fiduciary responsibility was one part of the financial overhaul bill aimed at protecting consumers’ interests. Another part, setting up an independent consumer protection agency, may also be watered down.
The study proposal by Senator Johnson may be included in the actual bill, which means it would not be subject to debate. And consumer advocates contended that the study would stop regulators from making any incremental consumer-friendly changes until the study was completed. The study would also require the S.E.C. to go over territory already covered in a 228-page study, conducted by the RAND Corporation in 2008 at a cost of about $875,000, the advocates said.
“In my opinion, the Johnson study is a stalling tactic that will either substantially delay or totally prevent a strong fiduciary standard from being applied,” said Kristina Fausti, a former S.E.C. lawyer who specialized in broker-dealer regulation.
“The S.E.C. has been studying issues related to investment-adviser and broker-dealer regulation and overall market conditions for over 10 years,” she said. “It’s puzzling to me why you would ask an agency to conduct a study when it is already an expert in the regulatory issues being discussed.”
Even after the study was completed, legislation would still need to be passed to give the S.E.C. authority to create a fiduciary standard for brokers who provide advice. “As we all know, the appetite for doing this in one or two years is certainly not going to be what it is today,” said Knut Rostad, chairman of the Committee for the Fiduciary Standard, a group of investment professionals advocating the standard. His group circulated an analysis that tried to illustrate where answers to the study’s questions could be found.
Trusted Adviser or Stock Pusher? Finance Bill May Not Settle It
Spanish Jobless Reaches 4.13 Million In February
MADRID -- Jobless levels in Spain rose 2% to 4.130 million in February, a 2% rise on the prior month and an increase of 82,132 persons, the Ministry of Employment and Immigration announced Tuesday. That gain is half of what was seen in the same period a year ago, but there are 648,766 more persons unemployed than a year ago guaranteed payday loans. The overall level of jobless reached 18.6% in February.
AIG board approves $35.5 billion unit sale to Prudential
NEW YORK (Reuters) – American International Group Inc's (AIG.N) board approved a $35.5 billion sale of its Asian life insurance business to Britain's Prudential plc (PRU.L), a source familiar with the matter said on Sunday.
Prudential, Britain's largest insurer, will pay AIG about $25 billion in cash and the rest in equity, which could include preferred stock, the source said, declining to be identified because the deal is not public yet payday loan lenders.
A deal could be announced as soon as Monday, the source said.
(Reporting by Paritosh Bansal)
AIG board approves $35.5 billion unit sale to Prudential
Hot News: Nintendo’s Profit Down 23 PercentSummary Box: Gaps 4th-quarter profits
PUMPED UP PROFITS: Gap Inc.'s 45 percent increase in fourth-quarter profits was powered by its low-price Old Navy chain
SALES: Gap's revenue rose 4 percent, led by solid gains at Old Navy. It's namesake stores and Banana Republic chain saw small declines.
WHAT'S AHEAD: The company issued a full-year earnings forecast that was above analysts' forecasts guaranteed pay day loans. And it said it plans to gain market share across its North American businesses and find new opportunities overseas.
Kohls 4th-quarter results at a Glance
BOTTOM LINE: $431 million, or $1.40 per share.
REVENUE: $5.68 billion, up 9 percent.
SALES AT STORES OPEN AT LEAST A YEAR: Up 4.5 percent
FREE CASH FLOW: $1.6 billion in the latest fiscal year, compared with $684 million in fiscal 2008
REAL ESTATE STRATEGIES: Kohl's ended the year with 1,056 stores in 49 states, including 56 that it opened in 2009 business cards design. Kohl's completed 51 store remodels, compared with 36 stores in the prior year. For the current fiscal year, it expects to open approximately 30 stores and remodel 85 stores.
JMP Group posts 4Q profit, reversing year-ago loss
SAN FRANCISCO – JMP Group reported Wednesday that it had reversed a year-ago loss as revenue nearly tripled on rising investment bank activity as the investment manager paid down debt.
For the final three months of 2009, JMP earned $3.5 million, or 16 cents per share, versus a prior-year loss of $6.6 million, or 33 cents per share.
There were 12 percent more shares outstanding in the most recent quarter, which would reduce per-share results.
Revenue rose to $46.1 million, from $16.8 million in the 2008 fourth quarter.
Investment banking revenue jumped to $14.8 million, from $3.4 million the year earlier. Brokerage revenue slipped 12 percent to $8.2 million from $9.3 million. The company said it took in $3 best humidifiers.1 million in principal transaction revenue, versus just $132,000 a year ago. And it netted a $10.7 million gain on the sale and payoff of loans.
For all of 2009, the company posted profit of $10.8 million, 49 cents per share, compared with a loss of $10.6 million, or 53 cents per share for 2008. Revenue more than doubled to $149.5 million, from $73.1 million in 2008.
In afternoon trading, shares of JMP Group Inc. added 33 cents, or 4 percent, to $8.20. The lightly traded stock has ranged between $3.87 and $11.16 in the past 52 weeks.
U.S. Offers Solar Project a Crucial Loan Guarantee
The United States Department of Energy offered a $1.37 billion loan guarantee on Monday to a California company planning to build a large-scale solar power plant in the Southern California desert.
Skip to next paragraphA blog about energy, the environment and the bottom line.
Go to Blog »The loan guarantee for BrightSource Energy of Oakland, Calif., is the largest the department has given for a solar power project. BrightSource’s planned project, the Ivanpah Solar Electric Generating System, is the first utility-scale solar power plant to undergo licensing in California in nearly two decades.
It would use solar thermal technology, in which mirrors concentrate sunlight to heat a fluid and generate steam. If built, it would be the largest of its kind.
“We’re not going to sit on the sidelines while other countries capture the jobs of the future — we’re committed to becoming the global leader in the clean energy economy,” Steven Chu, the energy secretary, said in a statement.
The loan guarantee is contingent on the Ivanpah project passing state and federal environmental reviews.
Some environmental groups have objected to the site of the project in the Ivanpah Valley, arguing that the plant would eliminate habitat for the imperiled desert tortoise and other rare plants and wildlife portable air conditioners. BrightSource earlier this month offered to reduce the size of the plant to lessen its impact on wildlife, but representatives of the Sierra Club and Defenders of Wildlife said the move was inadequate and argued the project should be relocated.
Surveys have found 25 desert tortoises on the site, which is about 45 miles south of Las Vegas.
Executives at BrightSource, which is backed by Google, Morgan Stanley, Chevron and BP, have said the loan guarantee is crucial to obtaining financing to build the plant at a time when banks are reluctant to finance new technologies. The company will not disclose the total projected cost of the power plant.
The Ivanpah plant will deploy thousands of mirrors, called heliostats, that focus the sun on three towers that will each contain a boiler filled with water. The focused heat creates steam that drives a turbine to generate electricity. The plant, to be built by Bechtel, is expected to create 1,000 construction jobs.
BrightSource has signed contracts to deliver 2,600 megawatts of electricity to the utilities Pacific Gas and Electric and Southern California Edison.
U.S. Offers Solar Project a Crucial Loan Guarantee
Hot News:Schlumberger Ltd. to Buy Smith
Filed at 1:49 p.m. ET
HOUSTON (AP) -- Oilfield services provider Schlumberger Ltd. said Sunday it will acquire another major industry player, Smith International Inc., for about $11 billion in stock.
Smith stockholders will receive 0.6966 of a Schlumberger share for each share held. Based on Schlumberger's closing stock price Friday of $63.90, that values Smith shares at $44.51 each. Based on Smith's 247.4 million shares outstanding, the all-stock deal is worth $11.01 billion.
The deal values Smith shares at a 25 percent premium to their closing price Thursday before reports of the companies' merger talks sent the company's shares soaring no faxing payday loan.
Schlumberger, based in Houston, struggled last year as the global recession weakened energy demand and discouraged drilling operations around the world. But prices have since rebounded. The acquisition by the world's largest oilfield services company comes six months after rival Baker Hughes paid $5.5 billion to acquire rival BJ Services.
IMF provides 3.32-billion-dollar loan to Romania
WASHINGTON (AFP) – The International Monetary Fund said Friday it would provide 3.3 billion dollars to Romania, part of a massive loan aimed at helping the EU member recover from a severe recession.
The IMF, the World Bank and the European Union last May forged a rescue package of 20 billion euros (27.2 billion dollars) for Romania, hard hit by the global economic crisis.
The latest installment brings to 12.6 billion dollars the money Romania has received under a 24-month loan, the Washington-based institution said in a statement.
The IMF executive board completed reviews Friday of Romania?s economic performance under the program, which allowed the "immediate disbursement" of the 3.32 billion dollars, the fund said.
John Lipsky, the IMF deputy managing director, said the Balkan country faces major fiscal challenges amid "a difficult political and economic environment sears kerosene heaters."
Lipsky noted that the deficit needed to be reduced to stabilize the ratio of public debt to economic output "and to comply with the criteria for accession to the euro area."
"The adjustment strategy entails politically difficult spending decisions and will require strong and steadfast implementation," he said.
"Additional reforms to strengthen fiscal controls are crucial, including in expenditure commitments, contingent liabilities, and public entities outside the central government."
The IMF projects the Romanian economy will grow 1.3 percent in 2010, after shrinking more than 7.0 percent last year.
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