Moldova thanks Romania for $171 million loan, says it will be spent on modernizing the country

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Moldova's prime minister has thanked Romania for a 150 million euro ($171 million), five-year loan which he said will be spent on modernizing the former Soviet republic, which wants to join the European Union.

Premier Valeriu Strelet said Tuesday that the loan, agreed upon last month, will bolster reforms and be spent on joint projects that "raise (Moldova's) development level closer to Romania's and Europe's."

Romania's Parliament on Tuesday approved the loan, which has an annual 1.5 percent interest rate. Strelet, who was visiting Bucharest, said the two neighbors also planned joint energy projects.

The International Monetary Fund said last month it would not negotiate a new loan program with Moldova, dashing the government's hopes of a deal to help cover pensions and salaries.