Daily Newsletter - 13 May 2019


Macroeconomic News (4)

Fitch Ratings opinion

Fitch Ratings has confirmed the long-term foreign and local currency debt ratings of Romania at "BBB minus" with a stable outlook, but warned that the budget deficit could rise to 3.4% of the GDP in 2019. The government founded the state budget on unrealistic estimates, said the financial rating agency. Romania's country ceiling was confirmed at "BBB plus", while the short-term local and foreign currency rating was confirmed at "F3".


Trade deficit up 34% in Q1

Romania's trade deficit increased by 33.9% in the first three months of this year, compared to the corresponding period of last year, reaching a total of EUR 3.645 billion, according to data released by the National Statistics Institute (INS). Exports amounted to EUR 6.13 billion, while imports amounted to EUR 7.36 billion in March, which led to a deficit of EUR 1.23 billion. Compared to March 2018, exports were up 0.4%, while imports jumped 2.7%.


VAT rate cut for bio and traditional products to reduce tax revenues by RON 836 million

The decision to slash the VAT rate to 5% for bio and traditional products will reduce the state budget's revenues by a total of RON 836 million in the next four years. The loss of VAT revenue will range between RON 106 million in 2019 and RON 260 million in 2022, according to the documents accompanying the draft decree. On the other hand, the tax cut would lower the price of high quality food.


Romania's economy growing slower

The Romanian economy reported a growth rate of 3.9% for the first quarter of this year, down from 4.1% in Q4, 2018, according to a Reuters poll of nine analysts. The analysts estimate an annual growth rate for 3% for the entire year 2019, far below the Government's 5.5% estimate. All the major international financial institutions have revised downward their growth estimates for Romania.


Financial News (2)

Boomerang effect

Apart from the CEC and Raiffeisen Bank, which retained the same margin for new loans after the introduction of the IRCC, most banks decided to increase their margins in order to cover the difference of one percentage point between the two types of interest rates. Mortgage installment based on the new index are between RON 13 and 118 lower. However, Alpha Bank and First Bank charge their clients higher installments under the new index.


Banca Transilvania posts 30% increase in earnings

The Banca Transilvania group reported RON 507.5 million in earnings for the first quarter of this year, up 30% year-on-year. The aggregated assets jumped 2.2% to RON 79.7 billion. The bank granted 5,200 new loans worth RON 215 million in the first quarter.


Investment News (1)

RON 22 million restoration project

The Hunedoara County Council approved a proposal to apply for EU funds in order to restore and preserve the amphitheater located at the Ulpia Traiana Sarmisegetusa archeological site. The project is worth more than RON 22 million.


Legislative News (2)

Dragnea announced double standard bill

Liviu Dragnea, President of the Social Democratic Party (PSD), announced he would file with the Parliament a bill banning the double standard in consumer goods. The bill will feature fines for companies selling lower quality goods in Romania.

Minister of Labor says social dialog law implementation is top priority

Marius Budai, the Minister of Labor, stated in Vaslui on Friday that implementing the social dialog law is the top priority for the coming month. "I think that the main challenge for us, who control the government, is to ensure, discuss and implement a national labor force strategy. It is a matter that we will pursue in the next few years: starting next week, I will hold a series of meetings, beginning with the Coalition for Romania's Development (CDR), followed by other employers and trade unions, in order to develop a strategy that is really to our advantage," the minister said.

Politics (2)

More than 20 million ballots ordered for European Parliament election

The Permanent Electoral Authority (AEP) announced it had ordered 20,104,459 ballots for the European Parliament election of May 26. Aside from the 20 million ballots meant for national use, the AEP ordered a further 1.3 million ballots that will be sent to voting stations located abroad.


Dragnea accuses president of campaigning for PNL

Liviu Dragnea, leader of the Social Democratic Party (PSD), said President Iohannis is not campaigning for the referendum, but trying to help the National Liberal Party (PNL) move up in the polls. Dragnea accused the president of using the state institutions for political and personal interest.


Social (1)

Population continues to shrink

Romania's population continued to shrink in March, albeit at a slower pace. Population numbers dropped 10,330 in March, compared to 11,554 in the corresponding month of 2018, mainly because of a reduction in death rates, according to data released by the National Statistics Institute (INS).