Daily Newsletter - 15 May 2019


FIC (1)

Future hopes and threats

In its latest edition, the Foreign Investors Council’s (FIC) Business Sentiment Index has revealed that companies are still worried about “the quality of regulations and lack of predictability”, while some of FIC’s members are “more skeptical about the further growth in their business.” The FIC’s report noted: “We are still seeing a consistent number of respondents who are expecting their business to grow and who will continue to invest but there are signs that this trend is likely to inverse.” It added: “By looking at these results we believe we need to sound an early warning that clouds may be gathering on the horizon and the complete lack of predictability we have seen in past years is starting to take its toll.”


Macroeconomic News (4)

Economic growth forecast

The National Statistics Institute (INS) will publish today the data on the industrial production trend - an increase of only 1% in the first two months of the year. The economy grows by 4%, but the industry only 1%? How? The economy has caught the "German flu", said Horia Braun, chief economist at BCR. The GDP growth estimates for the first quarter of the year are very good: BCR - 4.4%, ING Bank - 4.1%, Raiffeisen Bank - 4%.


Foreign debt up EUR 397 million in three months

Romania's total foreign debt increased by EUR 397 million in the first three months of 2019, reaching EUR 99.814 billion, according to data released by the National Bank of Romania (BNR) on Tuesday. On December 31, 2018, the total foreign debt was EUR 99.417 billion. The long-term foreign debt totaled EUR 67.427 billion on March 31, 2019 (67.6% of total foreign debt), down 0.8% from 31 December 2018.


Trade deficit worsens

The trade deficit was EUR 1.2 billion in March, about 16% higher compared to the corresponding month of the previous year. The INS figures on Romania's trade leave little room for interpretation. The negative evolution over time is very obvious. The increase in the deficit and the reversal of export and import trends speak for themselves.


Romania reported industrial production increase

Industrial output declined 0.3% in the euro area and 0.1% in the European Union in March, compared with the previous month, according to data released by the European Statistics Office (Eurostat) on Tuesday. Monthly increases in industrial production were reported by Lithuania (3.5%), Denmark (1.8%), Slovakia (1.2%), Ireland and Hungary (both 1%), Luxembourg (0.8%), Latvia and the United Kingdom (both with 0.7%), Estonia (0.6%), Poland (0.5%), Germany (0.4%) and Romania (0.3%).


Financial News (4)

Alpha Bank's issue of bonds ends successfully

Alpha Bank Romania has successfully completed the first issue of mortgage-backed bonds in Romania. The issue is worth EUR 200 million and the adjustable-rate bonds mature in five years. "Both local and international institutional investors, such as IFC and EBRD, have shown a special interest in this transaction," a bank press release noted on Tuesday. The issue is a milestone for both Alpha Bank Romania and for the national capital market, and is part of a larger program involving issues worth EUR 1 billion.


BNR took RON 2.9 billion off market

The National Bank of Romania (BNR) took RON 2.9 billion off the market by attracting seven-day deposits at a 2.5% interest rate. BNR wants to keep the interest rates at a higher level, given the excess liquidity. At the last monetary policy meeting, BNR directors agreed to strict control of the banking system liquidity at a time when a surge in the inflation rate and a growing current account deficit are putting pressure on the exchange rate.


MFP to add RON 900 million to CEC Bank's equity

The Ministry of Finance will transfer RON 900 million to CEC Bank in order to increase the bank's capitalization, as soon as it receives the European Commission's approval, according to the Minister of Public Finance Eugen Teodorovici. The Minister refused to tell the media why Radu Ghetea's term as chairman of CEC Bank's board had not been extended.


ING Bank Romania posts 16% increase in revenues

ING Bank Romania announced that its first quarter revenues amounted to RON 491 million, up 16% on an annual basis. The increase in revenues was driven by the expanding client base, as well as the fact that ING clients are more active than before. The gross profits amounted to RON 222 million, up 4% on an annual basis.


Investment News (3)

Cabinet approves technical and economic indicators of hospital study

The Cabinet approved at Tuesday's meeting the technical and economic indicators of the feasibility study for the Iasi Regional Emergency Hospital (SRUI). The project is estimated at EUR 500 million, including VAT, with EUR 150 million being grants. Prime Minister Viorica Dancila announced at the beginning of the Cabinet meeting that the hospital would have almost 900 beds.


Pillar II funds brought better yields than bank deposits

According to the study, 86% of Romanians know about the existence of Pillar II and are well aware of their rights as Pillar II participants. Of these, 7 out of 10 are aware that funds accumulating in Pillar II individual accounts are their property and that they are guaranteed by law. The campaign was launched with the help of  the Coalition for Romania's Development (CDR) to support Pillar II.


Top investment targets for Pillar II funds

Pillar II needs predictability and stability. The campaign was launched with the help of the Coalition for Romania's Development (CDR) to support Pillar II.

Legislative News (2)

Penalties for double standard in quality

Companies that practice a double standard and sell Romanians lower quality consumer goods could be fined up to 4% of their turnovers and forced to suspend their operations, according to a draft bill introduced by PSD leader Liviu Dragnea.


VAT rate to be reduced for some food proucts

The VAT rate will be reduced from 9% to 5% for the delivery of high-quality food, namely mountain, organic and traditional products authorized by the Ministry of Agriculture and Rural Development (MDAR). The measure was adopted today by the Cabinet through an emergency decree.


Politics (2)

President Iohannis blames PSD for Schengen failure

President Klaus Iohannis stated on Tuesday that the Social Democrats are solely responsible for Romania's failure to join the Schengen space, as well as for the continued use of the Cooperation and Verification Mechanism.


PNL launched own political program

The National Liberal Party (PNL) launched its political program for the Euro-parliamentary elections on Monday night. The PNL program is called "Experts for the European Parliament" and it is a true European governance program designed to complete the process of EU integration by developing the country with European funds, and accession to Schengen and the eurozone.


Social (1)

Child rearing bill allows mothers to obtain revenues from independent activities

The bill drafted by Liviu Dragnea and submitted to the Chamber of Deputies on Tuesday stipulates that mothers who receive child support from the state will also be able to earn income from independent activities. The initiative was also signed by deputies Alfred Simonis and Lia Olguta Vasilescu. The state will continue to pay allowances to individuals who generate revenues from independent activities, intellectual property rights and from agricultural, forestry and fish farming activities.