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Daily Newsletter - 23 October 2017

Summary

Macroeconomic News (4)

Bad news for the Government: IMF forecasts a 4.5% deficit of GDP for next year 

IMF's autumn report has improved the economic growth perspectives for Romania to 5.5% this year, 4.4% next year , 3.8% in 2019 and 3.3% in 2020. But the Fund's data also bring bad news. According to IMF experts, the budget deficit will reach 4.5% of GDP next year and will not fall below 4% of GDP by 2022, which will determine an increase in the public debt from below 39% of GDP this year to nearly 47% of GDP in 2022.

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Romania has the highest fuel excises among the countries from the area 

After the increase in excises in two stages and against the backdrop of the slight depreciation of leu against euro, Romania got to have the highest fuel excises among the countries around. Petrol excise is 431 euros per 1000 liters now in Romania, after the Government had raised this tax on 15 September and 1 October. All the EU member states around Romania have come to have a lower level of this tax. In Bulgaria, for example, the excise is only 363 euros, while in Hungary it is 395 euros, according to the latest statistical data from Oil Bulletin, the European Commission's monitoring service of the fuel market. In Poland, the excise is 393 euros per 1000 liters.

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WORLD BANK: Romania's economy is to grow above its potential in 2017 and 2018 

Romania's economy is to grow above its potential in 2017 and 2018, the World Bank (WB) has estimated, pursuant to the latest update of Regional economy, migration and mobility in Europe and Central Asia report. "GDP will rise 5.5% probably this year, due to the tax stimulation measures and to the improvement of European economy. The increase in consumption would extend the current account deficit to 3.1% in 2017, from 2.4% in 2016. Inflation would rise, reflecting the excessive internal demand and the attenuation of tax reduction effects. The National Bank of Romania expects a gradual growth in inflation to 2% at the end of 2017", WB report reveals, cited by Agerpres.

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The World Bank warns: Attention to the unhealthy growth - Romania, increasingly more vulnerable to exogenous shocks. 

Romania is increasingly more vulnerable to exogenous shocks and authorities should take into consideration additional fiscal measures if the budget deficit risks to exceed 3% of GDP in 2017 and 2018, the World Bank warns. The accumulation of fiscal pressure and the excessive internal demand limit the room for manoeuvre for the Romanian authorities this year and in the future, the international financial institution specifies, in Regional economy, migration and mobility in Europe and Central Asia report.

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Financial News (2)

The Deposit Guarantee Fund compensates only small banks in case of bankruptcy. Systemic banks go to NBR first 

Pursuant to the law, systemic banks (the first 11 banks in the case of Romania) undergo a resolution process at NBR first if they have financial issues, while the other 15 banks can go bankrupt and depositors are compensated to the extent of 100,000 euros by the Deposit Guarantee Fund (FGDB). For the banks undergoing a resolution process their rescue or sale to another investor is tried. Clients' deposits are guaranteed in their turn, but are taken over in the so-called "good banks" initially.

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How does top 5 mortgage loans look like from the viewpoint of interests and monthly installment 

The mortgage loans with the lowest interests are granted by CEC Bank, Garanti Bank, ING Bank, Raiffeisen Bank and BCR at present, according to a calculation based on a RON 225,000 loan for 30 years, made by the financial portal Finzoom, the monthly installment varying in their case from RON 1061 to 1162. The lowest interest, of 3.18%, belongs to the standard mortgage loan from CEC Bank (AER 3.74%), the overall sum to be reimbursed reaching RON 388,692. In the case of Garanti Bank, the interest is 4.17% (AER 4.52%), at ING Bank - 4.51% (AER 4.62%), at Raiffeisen Bank, Your House loan has a 4.5% interest (AER 3.7%), while My house BCR - 4.5%, fixed 60 months (AER 4.73%).

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Investment News (2)

IN THE FIRST EIGHT MONTHS, CFR paid RON 1.5bn for EU-funded projects 

Compania Naţionala de Cai Ferate (CFR) paid RON 1.5bn in the first eight months of 2017 for EU-funded projects and estimates to exceed the RON 2bn threshold by the end of the year, sums which are be reimbursed and which will increase the absorption rate of European funds, according to a press release. The railway company finished 85% of the modernization works in the railway infrastructure and superstructure on 180 kilometers of railway between Simeria and Sighisoara, over 100 kilometers of modernized railway being accepted, and launched other 141 kilometers on Radna - Gurasada - Simeria section for execution, the source shows.

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Hungary's infrastructure helps Romania as well: Direct foreign investments doubled in the counties bordering Hungary over the last decade 

Direct foreign investments doubled in only three of Romania's eight regions over the past 10 years, a Ziarul Financiar analysis based on the NBR report on FDI shows. The three regions are the west, the north-west and the north-east of the country. The weight of Bucharest - Ilfov region, the most developed in the country, fell from 64% to 59.9% in total over the last decade.

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Legislative News (1)

Government does not support the law against "groundskeepers". The Criminal Code includes offenses such as illegal taxation of drivers 

The Government does not support the promotion of a law imposing a prison term for the levy of a parking tax by an unauthorized person, considering that the offense is covered by the Criminal Code and the increase in the penalty for public spaces is discriminatory. It's the liberal parliamentarians who have initiated such a legislative project, arguing that drivers have gotten to be threatened if they fail to pay the money requested illegally by unauthorized people, known popularly as "groundskeepers" when they park on the public space of cities.

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Politics (2)

Orban: We fight with a dictatorial party, which uses the state institutions to hit all those who have the courage to criticize them 

The PNL leader, Ludovic Orban, stated Sunday, at the congress where the National Liberal Youth will elect its management, that he does not like when party members "have fervor" in the internal campaigns, but they do not risk carrying the external ones, stating that political battle is with a political rival and PNL fights with a dictatorial party, which uses the state institutions to hit all those who offer resistance.

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"Good morning!" after 10 months at ALDE: C. P. Tariceanu's party asks PSD for explanations on the solidarity tax 

ALDE has reservations about the 2% rate accounting for the social solidarity contribution and waits for PSD to explain where it comes from, Varujan Vosganian stated Saturday, cited by Agerpres. "Another idea about the solidarity contribution emerged the other day, I specify it is not about the solidarity tax, but about a solidarity contribution, of 2%. Because of this announcement, I cancelled yesterday a meeting I had with the trade unions and employers in Iasi, because I wanted to tell trade unions and employers things I must tell alliance partners".

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