Romania will be granted some 300 million by the European Investment Bank (EIB) in December, in the first block of a 1-billion euro loan agreement that is to be signed today, Business Standard reported citing governmental sources. The funds are to be used to finance the budget deficit, while investment projects will be financed from the state budget for 2009, the sources added.

A press release issued by Romania's Ministry of Economy and Finance (MEF) indicates that the EIB loan is aimed to co-finance investment projects eligible for non-reimbursable EU assistance for transportation, environment, and to competitively increase and finance priority programs which are not eligible for non-reimbursable EU funds.

However, sources told Business Standard that the budget deficit could exceed the 3-percent gross domestic product (GDP) limit permitted by the EU, even reaching 3.8% in 2008 and a staggering 5% in 2009.

According to MEF, some RON 7 bln (1.84 bln euros) are needed to finance the budget deficit. Some 1.05 billion euros were collected from state bond issues and a further 0.81 bln euros are still to be gathered by year-end.

Romania's budget deficit could widen beyond 3 percent, given financing access is restricted and government spending usually adds to the deficit at the end of the year, according to analyst Gabriel Biris.