Daily Newsletter - 23 January 2019


Macroeconomic News (4)

Fruit and vegetable imports reached EUR 1.14 billion

Romania imported vegetables and fruit worth EUR 1.14 billion in the first ten months of 2018, while exports amounted to EUR 192.6 million, according to data centralized by the National Statistics Institute (INS). The value of exports decreased by 7.3% during the period in question, while imports jumped 4.1%, compared to January-October 2017. Thus, Romania's deficit in the international vegetables and fruit trade amounts to EUR 946.4 million.


Cabinet fails to borrow

The government is having a hard time borrowing at the beginning of this year, mainly because of a lack of predictability. So far, the government has managed to borrow about 60% of the target amount, albeit at rising interest rates. The government has yet to draft this year's budget, which means that the budget deficit and the annual borrowing plan are unknown. At the same time, the government has introduced special taxes on banks, telecoms and energy companies.


Private consumption is slowing down

Romania was one of the top performing economies of the European Union in 2018, with an estimated GDP growth rate of 4%, according to Johan Meyer, CEO of Franklin Templeton Investments and Portfolio Manager of the Proprietatea Fund. However, after record growth in the past years, the national economy is now heading into uncharted waters.


CFA Romania sees reference exchange rate at RON 4.78 per EUR

CFA Romania analysts issued the second most severe forecast regarding the depreciation of the national currency in 2019: RON 4.7883 per EUR at the end of the year. The estimate is featured in the Macroeconomic Confidence Indicator (IIM) published on Tuesday. The harsh restrictions introduced by Decree 114 lower the analysts' confidence in the national economy.


Financial News (3)

Bankers see RON fulling further

The national currency has depreciated 1.05% so far this year. The massive imports, the energy imports, the twin deficits and Decree 114 are the four fundamentals that sent the RON spinning. In addition, 2019 will be marked by an increased volatility of the national currency, a situation made more difficult by the upcoming election. Some claim that the RON could go as low as RON 4.74 per EUR before rising again.


BNR strikes back

"Senator Daniel Zamfir and lawyer Gheorghe Piperea started on January 13, at the Antena 3 TV station, an attack against the reputation of the National Bank of Romania by making unfounded allegations, based on untruths and a grave misunderstanding of BNR's involvement in the interbank financial markets," said BNR spokesman Dan Suciu.


RON-denominated assets still worst performing in region

Romanian assets had the worst performance in Central and Eastern Europe for the second week in a row. The RON fell to a new all-time low, while the interest rates of government securities rose as a result of some unconventional fiscal measures taken by the government, including a 1.2% tax on bank assets, including government bonds, according to Erste Bank.


Investment News (1)

Therme opens new restaurant

The Therme wellness and relaxation complex, located outside Bucharest, has opened a fusion restaurant at a cost of EUR 3.5 million. The Humboldt Restaurant can seat 190 in an indoor area of 1,100 sqm, plus a terrace of over 900 sqm.


Legislative News (2)

Legislative Council rejects Decree 114

The Legislative Council responded to the draft Decree 114 in December with a 23-page list of observations and proposals. The Council urged the Cabinet to modify the decree, following a detailed explanation of how it would impact 25 other laws.


Compensatory appeal law to be amended via decree

The Cabinet will issue a decree amending the compensatory appeal regulations next week, according to the Minister of Justice, Tudorel Toader. The controversial bill passed by the PSD-ALDE majority has become one of the main public issues in the country, following a wave of violent crimes committed by criminals who were released under the new law.


Politics (1)

Victor Ponta: I do not want to choose between Iohannis and Dragnea

Victor Ponta, leader of Pro Romania, said that the party would either put forward its own presidential candidate or support that of another party, based on the chances of reaching the second round against incumbent Klaus Iohannis. Ponta added that an alliance with the PSD is only possible if "Dragnea's gang" leaves the party. The former prime minister reiterated that he would not run for president.