Chris Bryant

Chris Bryant is the FT's Frankfurt correspondent covering German industry. His previous roles include central and eastern European business correspondent, Berlin correspondent, Washington correspondent and markets reporter in New York.

Romania is set to obtain a new €5bn precautionary loan deal from the International Monetary Fund and European Union, its president has confirmed. Traian Basescu said in speech on Sunday that funds would serve as a backstop and would only be drawn if strictly necessary. The safety net will remain in place for two years.

The package is likely to reassure investors given the still lingering risk of a spillover from Europe’s sovereign debt crisis and the impetus the IMF may give to further structural reforms in Romania. Analysts also said a precautionary deal would help lower the government’s borrowing costs. 

Romania and Hungary cut interest rates to record lows on Monday as central bankers looked to support growth following improved investor risk perception in central and eastern Europe.

The National Bank of Romania lowered its monetary policy rate from 7 per cent to 6.5 per cent, while the Magyar Nemzeti Bank in Budapest trimmed the base rate from 5.75 per cent to 5.5 per cent, the lowest since the fall of communism.

Romanian and Hungarian currencies have strengthened in recent weeks and it has become cheaper to insure against the risk of their debt defaulting, as investors bet that eastern Europe is gradually overcoming the worst of the financial crisis. Greek banks hold significant assets in Romania, but so far contagion risks appear benign.