If Romania does not manage to channel FDI in the following quarters it will have significant difficulties in financing the current account deficit, Raiffeisen Bank’s chief economist Ionut Dumitru stated.
Although it represents just 4 per cent of GDP, the current account deficit is financed from the National Bank of Romania’s international reserves, not autonomously through private capital, Raiffeisen Bank’s chief economist Ionut Dumitru stated yesterday during an economic conference organized at BNR, Mediafax informs. He pointed out that if Romania does not manage to channel FDI and inflows from EU funds in the following quarters then it will have significant difficulties in financing the current account deficit even at levels of 3-4 per cent of GDP. Dumitru pointed out that predictability, which is currently entirely lacking, is needed in order to be able to re-channel investments.“Moreover, the absorption of European funds was an illusion and we all saw that. We hope that in the following period all political forces will channel all their efforts to improve the absorption of European funds because otherwise there is no point talking about economic growth,” he added.The current account of the balance of payments registered a deficit of EUR 3.67 bln in the first nine months of the year, down by 23.2 per cent compared to the same period last year, after hikes were registered in services, current transfers and revenues. The trade deficit grew from EUR 5.2 bln in September 2011 to EUR 5.4 bln, but the evolution was compensated by the surplus in transfers and services and by a smaller deficit in revenues. Direct investments from non-residents covered 30.2 per cent of the current account deficit in the January-September 2012 period. FDI totaled EUR 1.109 bln in the first nine months of the year, up by 30 per cent compared to the similar period last year.
SMEs set trend for bad credits in banking system
Small and Medium Enterprises (SMEs) set the trend for bad credits in the banking system, the rate of bad credits being inversely proportional with the size of the companies, and the banks are reticent when it comes to offering loans to this segment, Simona Muresan, general director of the National Guarantee Fund for Loans for Small and Medium Enterprises (FNGCIMM), stated during the same conference. The most recent European statistics on microloans show that Romania is 5th in Europe when it comes to the number of beneficiaries and 7th volume-wise.