The International Monetary Fund has agreed to give Romania a two-year rescue loan of $21.4 billion Cdn.

Jeffrey Franks, the head of the two-week IMF mission to Romania, told reporters Wednesday the first part of the loan, $8.2 billion, would arrive in the summer.

Romania is hoping to negotiate total emergency loans of about $33 billion from the European Union, the World Bank and other sources, said Mihai Tanasescu, the country's representative to the IMF last week.

Romania, which has been hit hard by the economic crisis in recent months, is the third EU member to receive a loan after Hungary and Latvia.

Eastern Europe has struggled with falling growth, sagging currencies and political turmoil from the crisis.

Romanian Prime Minister Emil Boc is expected to meet ministers later Wednesday and approve the loan request.

Franks said that as a condition of the loan, Boc's centre-left government would take measures to gradually reduce the budget deficit.

The European Commission said in a statement that "a key element of the economic policy package is an immediate and sustained fiscal consolidation to limit the budget deficit to 5.1 per cent of gross domestic product this year and to below three per cent of the GDP in 2011."

The country's public finances have been stretched by the economic downturn, with lower revenues from income and corporate taxes as well as higher costs on social security for the jobless.

The financial system has also been strained as some international investors have pulled out their capital on fears about the stability of the country's economy.

"The economic times are going to be difficult for Romania over the coming two years with or without international support," said Franks.

Labour Minister Marian Sarbu said this week there would be up to 800,000 unemployed by the end of 2009, higher than estimated.

The average monthly salary in Romania was about $730 in January and year on year inflation in February was 6.9 per cent, with the central bank hoping it would be reduced to 3.5 per cent for 2009 with forecasts indicating the country is headed for recession.

There are also fears that a large number of the estimated two million Romanians working in Italy and Spain may return as the global downturn hits those economies, in turn putting more strain on the Romanian economy.

Already, Romania's car and steel industries have been laying off thousands of workers in recent months as the economic crisis bites. The formerly booming real estate market has also plummeted in recent months.

The European Economic and Monetary Affairs Commissioner Joaquin Almunia said Wednesday he welcomed "the commitment by the Romanian authorities to implement a major program of economic adjustment aimed at bringing the economy on a sound and sustainable growth path."

The national currency, the leu, has lost about 20 per cent since January 2008. Romania's central bank warned last month that it might need help to shore up its foreign currency reserves, which amounted to $43.6 billion in December.