By Nick Kochan
The election of a majority Social Democratic PSD party in Romania this past weekend gives the country a chance to push the reset button on its relations with foreign investors.
After a year when the government has been drawn into fruitless squabbles in commercial courts and arbitrations with no less than five international companies, now is the time to reassure investors that Romania is open for business. The time to close the book on introspective and opaque government is long overdue.
Energy companies have been in the forefront of these battles with Romanian officialdom. So the government took Enel, the Italian energy company, to court over a breach in a privatisation contract but ended in July 2016 facing a €1bn bill. E.on, the German energy company, won an arbitration dispute in Paris and the government was forced to pay its legal costs. Read more
By Greg Konieczny of Templeton Emerging Markets Group
Following presidential elections in Romania last month and the surprising but positive victory of Klaus Iohannis, there was one key development that we, as a major investor in the market, really wanted to see: namely, for the government to pledge to reduce its budget deficit and commit to a new loan agreement with the IMF in 2015.
If an agreement is signed following negotiations between the government and the Fund this week, it will further prompt Romania to implement reforms and increase fiscal predictability. Read more
Romania’s latest interest rate cut – to another all-time low – comes after a sharp slowdown in growth, but further easing will have to be weighed against the political outlook and the government’s likely parting of ways with the IMF.
The National Bank of Romania (BNR) cut its key rate 25 bps to 3 per cent on September 30, while reducing its minimum reserve requirements two percentage points to 10 per cent. The latter is expected to increase market liquidity by around 3.6bn leu ($1bn) from October 24, according to a note from BCR, Romania’s largest commercial bank. Read more
Negligible inflation and a desire to maintain exchange rate stability in spite of capital inflows were the key factors prompting Romania to cut interest rates to an all-time low, analysts said on Tuesday.
On August 4, the National Bank of Romania (BNR) reduced its key policy rate to 3.25 per cent from 3.50 per cent. Reuters quoted Governor Mugur Isarescu as telling reporters that more easing was possible. “There may be further (easing) space but, this time, we’d be forced to take decisions taking into account the external environment to a greater extent,” Isarescu was quoted as saying. Read more
Economic growth in emerging Europe surged in the first quarter as Germany’s dynamism drove manufacturing output and fears of that the Ukraine crisis would exert a damping did not materialise, data announced on Thursday showed.
“In spite of fears of spillovers from the crisis in Ukraine, there are no signs (so far a least) that this has affected the recovery in Central and South Eastern Europe,” said William Jackson, emerging markets economist at Capital Economics in London.
Four out of six emerging European countries to report preliminary GDP growth data showed a significant expansion in the first quarter year-on-year (see chart). Hungary, Poland, Slovakia and the Czech Republic posted an acceleration in GDP growth, while Romania and Bulgaria slipped back. Read more
Five per cent GDP growth is these days more associated with the fittest Asian and African emerging economies than the sluggish EU fringe, but Romania has sprung a surprise with its Q4 2013 figures, its best for five years.
A flash estimate from Bucharest’s National Institute of Statistics on February 14 suggests that the economy grew by 5.2 per cent year-on-year in the final quarter of last year. This takes its full-year rate to 3.5 per cent, among the fastest in Europe and appreciably above a recent IMF forecast of 2.8 per cent. Meanwhile inflation, once a serious concern, fell to an all-time low of 1.1 per cent in January. Read more
In recent weeks, much has been made of Romanians’ desire to leave their country and work abroad, partly due to the weakness of Romania’s own economy. On Wednesday, the country’s central bank made an ambitious move that may help that economy, the second poorest in the EU, by cutting rates to a record low and easing reserve requirements. Read more
It was the biggest initial public offering in Romania’s history, and the latest of several big IPOs in eastern Europe. But will Friday’s part-privatisation of natural-gas utility Romgaz reinvigorate Romania’s stalled liberalisation programme? Read more
Romania’s interest rates have hit a record low, but will it be enough to revive its flagging economy?
As central banks in some developed markets seem to be gearing up for tighter monetary policy, Romania’s announced a third consecutive interest rate cut on Monday, citing falling inflation, and with an eye on sluggish growth. Read more
By Lucian Anghel, chairman of the Bucharest Stock Exchange
The Bucharest Stock Exchange, or BVB, has never played a big role in Romania’s economy; nor has it been the focus of much international attention.
But, after a period of turbulence, during which the country has suffered political storms and frenetic general elections, that could all be about to change. Read more
Worried about growth? Get cutting!
That was the message from Romania’s central bank as it surprised analysts and the market by cutting interest rates by 50 basis points to 4.5 per cent on Monday. Read more
By Gunter Deuber of Raiffeisen Bank International
Positive developments in Romania are turning the country into something of an investor darling.
With economic growth in the first quarter of 2.2 per cent year-on-year, Romania was one of the best performing economies in the EU. Full-year, economic expansion of at least 2 per cent looks perfectly feasible, making Romania a star performer among its regional peers.
What’s behind the good news? Read more
It’s a precautionary arrangement, but could it spell another step towards economic recovery for beleaguered Romania? This week, the International Monetary Fund reached a deal with the Romanian government on a €4bn standby loan, tied to the condition that Bucharest push ahead with planned reforms to the health system, and with its stalled privatisation programme. Read more
Romania’s main interest rate was cut to record low on Monday on the expectation that inflation will slow, in what could be the first of several reductions. The National Bank of Romania (BNR) cut its benchmark rate to 5 per cent, after CPI came in at 5.3 per cent year-on-year in May, the same rate as April. The Bank expects inflation to fall into its target range of 1.5 to 3.5 per cent for the full year. Rates have been kept on hold since March 2012. Read more
By Dan Bucsa of UniCredit
It may have gone unnoticed by many amid the turmoil of the eurozone crisis, but four years after signing its first loan agreement with the International Monetary Fund, the European Commission, the World Bank and other international financial institutions, Romania has a much healthier economy. Yet it is still far from a happy ending. Read more
Slowly but surely, Romania is limbering up for its next sell-off of state-owned companies. Under IMF duress, the country may be about to shed some of its weighty burden of strategically important but failing enterprises.
On Friday, Reuters reported that Romania was launching the sale of a majority stake in CFR Marfa, the country’s rail freight operator. The starting price was set at 797.1m leu ($234m). Read more
Romania averted recession in the last quarter of 2012, but can only look forward to a long and slow slog this year as external and internal problems weigh heavy.
GDP crept forwards at a seasonally-adjusted rate of 0.1 per cent from the third quarter, and an unadjusted 0.3 per cent from the fourth quarter of 2011, the National Statistics Institute (INS) announced on Wednesday, giving details of figures published last month. Read more
Romania’s economy may be recovering from a deep crisis, but it is not recovering quickly enough for the country’s main lender, BCR.
Austria’s Erste Group this week announced that it would take a €300m goodwill charge largely due to the problems besetting BCR. So even if the International Monetary Fund is reasonably content with Romania’s economic progress, a key foreign investor is far from happy. Read more
The National Bank of Romania (BNR) kept its benchmark interest rate unchanged at 5.25 per cent on Monday, as policy makers juggled with the conflicting demands of meeting inflation targets and stimulating a flailing economy.
The Romanian leu strenthened slightly against the euro, to 4.40 lei to the euro after opening at about 4.42. Read more
Could the end to a grim year bring hope for beleaguered Romania? Markets have welcomed the ruling coalition’s landslide victory in Sunday’s election, hoping the country will win a new deal with the IMF and push through reforms in return. But have investors factored in the challenges ahead, or Romania’s fluid political landscape? Read more