Romania

Just months after an epic banking collapse forced Iceland into the arms of the International Monetary Fund, this island nation is locked in a fierce debate over how to pay off its creditors without ceding too much of its vaunted independence, The New York Times reported. The balance Iceland strikes between bowing to the policy demands of the global financial community and satisfying the desires of its increasingly resentful population of 300,000 will be closely watched as I.M.F. programs in beaten-down economies from Latvia and Ukraine to Hungary and Romania enter a crucial phase.

The International Monetary Fund said Wednesday that it would come to the rescue of Romania as part of a $27 billion financing package to help the country weather the financial crisis. The fund said in a statement from Washington that agreement had been reached on an economic program supported by a loan of about $17.5 billion under a two-year stand-by arrangement, The New York Times reported. Pending the approval of the fund’s executive board, Romania would be able to draw $6.75 billion upon board approval.

Austria's banks exert an outsize influence beyond the country's borders. In the 1990s, after the fall of communism, banks based in Vienna expanded eastward and came to dominate finance in Eastern Europe. Today, however, Hungary, Romania and Ukraine--where Austrian banks nearly cornered the market--have sought emergency aid from the International Monetary Fund. Foreign investors are fleeing Eastern Europe, worried that the problems could spread. Credit-rating agencies have warned that Austrian banks are highly exposed if Eastern European borrowers trigger a wave of defaults.

The forint hit a new low against the euro Friday, continuing a slide spurred Thursday by a Hungarian Banking Association letter instructing its members to fend off rumors of an impending freeze on customers' deposits, The Wall Street Journal reported. The country's central bank quickly sought to assure depositors their money was safe to avoid a run on the banks, but the effort failed to stabilize the currency. On Friday, the forint fell .95% against the euro. The currency has lost more than 20% against the euro since the start of the year.

The number of insolvencies in Romania is likely to exceed 20,000 in 2009 from 14,500 a year earlier as a repercussion of the global financial crisis, the National Union of Insolvency Practitioners (ANPIR) forecast. Around 1,600 cases of insolvency were recorded in January from 1,000 in the same month of the previous year, ANPIR president Arin Octav Stanescu reported. Debt recovery fell to 2.0 million euros in January from a monthly average of 35-40 million euros in 2007 and 2008.