The European Commission (EC) agreed on Tuesday to propose to the Council 5 billion euros in medium-term financial assistance to Romania.

The proposed European Union (EU) loan is part of a conditional multilateral package to help Romania out of the financial crunch.

The assistance is being provided in conjunction with the International Monetary Fund, which is expected to provide 12.95 billion euros.

Additional multilateral support of 2 billion euros will be provided by the World Bank with 1 billion euros, the European Investment Bank and the European Bank of Reconstruction and Development with 1 billion euros altogether on top of their general lending activities.

This will bring the total to 20 billion euros over the period to the first quarter of 2011.

The financial assistance will be disbursed in maximum five installments during the coming 24 months.

The policy program is designed to enable Romania's economy to withstand short-term liquidity pressures while improving competitiveness and supporting an orderly correction of imbalances in the medium term.

The Commission and Council Presidency had already announced in March their intention to support Romania, but this proposal still needs the approval of the EU finance ministers at their May 5 meeting.

"EU support to Romania underlines our solidarity to our Member States. In return, the support is conditional upon the implementation by the Romanian authorities of a major program of fiscal, financial and structural adjustment," European Economic and Monetary Affairs Commissioner Joaquin Almunia said in a statement.

"This will ultimately put Romania in a position to return to a sound and sustainable convergence path," he added.

A key element of the economic policy package is an immediate and sustained fiscal consolidation to limit the budget deficit to 5.1 percent of GDP in 2009, falling further to below 3 percent of GDP in 2011.

To support these targets, measures will be taken to improve budgetary policy credibility and predictability.

Before Romania, Hungary and Latvia have also been granted balance of payments (BoP) support of 6.5 billion euros and 3.1 billion euros respectively from the EU as part of wider assistance packages in the middle of the international financial crisis.

On April 8, the Commission proposed to increase the overall BoP financial assistance ceiling set in the current legislation to 50 billion euros from 25 billion.

(Xinhua News Agency April 22, 2009)