Romania has significant chances to “exit the recession”

The GDP will increase during the next three quarters, following the decisions of raising salaries and repaying the money to pensioners, says Liviu Voinea, state secretary with the Ministry of Finance says.

Romania has significant chances to exit the technical recession, because three consecutive quarters of economic growth will follow, says Liviu Voinea, state secretary with the Ministry of Finance, quoted by Mediafax. “The recently announced measures, reparatory for state employees and pensioners, contribute to economic growth, because the marginal propensity to consume reached an approximate 80 pc, meaning that of RON 10 earned by the Romanian citizen, RON 8 go to consumption, and population’s consumption accounts for approximately 70 pc of the GDP formation,” Voinea explained. According to the ministry official, “although the acting government did not inherit the best economic situation, it is still possible to maintain the economic growth target at 1.5 pc in 2012,” even if most analysts estimate a growth rate of just 1 pc this year, and some even see it at 0.5 pc, under the IMF forecast. The decision of appointing Liviu Voinea as state secretary with the Finance Ministry was published yesterday in the Official Gazette.

Chances are that the instrumental bridge bank will not be used, despite the situation in Greece, Georgescu says

Deputy Premier and Finance Minister Florin Georgescu yesterday said that, despite the situation in Greece, the banking system is sound and well capitalised, so he does not believe that Romanian authorities will be forced to use the bridge bank, an instrument recently enforced by the National Bank of Romania (BNR), to be used if banks get in trouble. “There is a very close collaboration between the Central Bank and the other supervisory institutions – the National Securities Commission (CNVM), the Insurance Supervisory Commission (CSA), the Private Pensions System Supervisory Commission (CSSPP) and the Government, through the Ministry of Public Finance. We analyse the evolutions abroad, the cash flows and the situation of banks and related economic agents. There is no reason for concern,” Georgescu assured.Referring to the devaluation of the Romanian currency, the deputy premier says this is part of a regional trend. “Look at the Polish zloty, the Czech koruna, or the forint,” he mentioned. Six Greek banks operate in Romania: EFG Eurobank (through Bancpost), Alpha Bank, Piraeus Bank, National Bank of Greece (Banca Romaneasca), Emporiki Bank (controlled by Credit Agricole) and ATE Bank. Greek banks control about 17 pc of the total assets existing in the Romanian banking system. According to data released in April by the Bank for International Settlements, the exposure of Greek banking institutions on Romania decreased last year by USD 2.34 bln, or 11 pc, to USD 18.8 bln. The total exposure of foreign banks on Romania dwindled last year by 5.4 pc, or USD 6.146 bln, to USD 107 bln, with the most significant drops being registered by Austrian and Greek banks. The four largest crediting institutions of Greece – National Bank of Greece, Alpha Bank, EFG Eurobank and Piraeus Bank – reported total losses worth over EUR 28 bln last year. The bulk of the loss, i.e. EUR 23 bln, resulted from the banks’ participation in the programme aimed at erasing EUR 100 bln of the Hellenic state’s debt to private creditors.

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