Two very influential business organizations (the Foreign Investors Council and the Romanian Businesspeople Association) having commended the adoption by the Bucharest Government of the Fiscal Code and Code of Fiscal Procedure on Thursday, 25 June, Finance Minister Eugen Teodorovici announced that the Government and the EC delegation present in Romania had not reached a compromise for the signing of a new preventive financing agreement between Romania and the IMF/EC/WB in the autumn. On Friday, the European Commission also issued a press release: “Important steps have been taken in some areas and the macroeconomic situation is strong. However, the overall progress in implementing the jointly agreed policy measures has not been sufficient, predominantly in relation to fiscal policy, to allow for a staff-level agreement with the Romanian authorities. Looking forward, programme achievements should be preserved as they form the basis for continued strong and balanced growth and job creation. Sound fiscal policies and the completion of the structural reforms started under the programme will be particularly important in this regard.
The aggregated value of salaries dropped toward 30% of the GDP, a ten-year low, while the operating profits of companies are closing in on 60% and growing. The salary mass had lost 8 pp after 2008, according to data presented by Florin Georgescu, Senior Vice-Governor of the National Bank of Romania (BNR).
The most likely outcome of the Greek crisis is that the country would remain part of the Eurozone, but even a Grexit would only have reversible and temporary effects on Romania. The RON is expected to dip 5% on a Grexit before recovering, according to Florian Libocor, Chief-Economist of BRD-GSG.
VAT revenues to the state budget showed solid growth in the first five months of this year, passing the social security and health insurance revenues. Year-on-year, VAT revenues went up RON 3.5% billion or more than 17%, which mirrors both the increase in consumption and the improving tax collection system.
European banking stocks showed significant losses, as Spain, Portugal, Italy, France and Germany suffer the effects of the capital flow restrictions imposed by the Greek government. The risk of contagion facing the Eurozone's outskirts has shaken the investors' confidence.
The aggregated value of new, RON-denominated housing loans jumped RON 800 million last month, while consumer loans surged RON 700 million, the first significant monthly growth in the past years. RON-denominated housing loans passed RON 12.4 billion at the end of May, while consumer loans stood at RON 30.3 billion.
The National Bank of Romania (BNR) is likely to keep the reference interest rate at 1.75% per year at the monetary policy meeting scheduled for tomorrow, July 1, and even through to the end of the year, according to the opinions expressed by members of the Romanian Association of Financial-Banking Analysts (AAFBR).
"We are at a major turning point and there's no way of knowing how the situation would play out. In general, the stock market becomes a lottery during economic crises because the usual fundamental rules no longer apply," said Daniela Ropota, a financial analyst with broker Intercapital Invest.
Swan Office & Technology Park, an office complex located in Bucharest's Pipera-Tunari neighborhood, has been available for sale for more than a year and a half. Despite the nearly 50% fall in price, the complex has yet to find a buyer.
With the summer recess at the very door, the Senate passed two controversial bills. The first is an amendment to Law 51/1995 which protects the defense and makes the prosecutors' life harder. Two of the most controversial paragraphs were written by Senator Ioan Chelaru (PSD), including one that would allow practically lawyers to set up organized crime rings.
Entrepreneurs who set up their first businesses created more than 40,000 jobs in the five years since the launching of the SRL-D program. The program started out by supporting young people, below the age of 35, who set up their first businesses and was later expanded to all entrepreneurs.