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March 23, 2023

UniCredit: Romania may turn to funds under preventive agreement

Romania may have to turn to funds under the EUR 5bln preventive stand-by agreement if the cost of loans from the external market proves too high in the first half of 2012, according to a UniCredit report released last week concerning the prospects of the banking sector in Central and Eastern Europe, quoted by Mediafax.

The same report argues that, in an economic environment mapped by aversion to risk, Romania’s public debt may not surpass 40 pc in the medium run. The bank further anticipates that the budget deficit will ebb to 2.5 pc of GDP this year, remaining steady in 2013, after shrinking to approx. 4.4 pc of GDP in 2011.

According to the same document, direct foreign investment in Romania may be affected this year by investors’ reluctance to take chances, as well as by uncertainty over the result of elections. “A gradual economic recovery is stalled by low external demand and by the slowdown of cash flows, a problem which is likely to persist in years to come,” the report further reads. UniCredit maintained its growth estimate for this year at 1.4 pc, while anticipating that budget deficit will ebb to 2.5 pc of GDP in 2012 and will remain steady in 2013.

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