Savings rate, higher than the region’s average level, still needing stimulation, according to BNR Deputy Governor Bogdan Olteanu.
Romania has registered an exceptional performance this year, higher than that of regional states, having the premises of an annual economic growth rate of 4-5 per cent until 2020, with an interbank market interest rate of around 5 per cent, a stable inflation rate and an exchange rate of RON 3.5/EUR, ING Bank President Misu Negritoiu stated at the Romania Financial Forum, zf.ro informs.
The ING Bank President explained this optimistic forecast through several factors, including a stable disinflationary process that will continue in the next three to five years, an economic growth of 2.5 per cent this year, highest level in the region considering that Hungary, Poland and Bulgaria registered a growth of approximately 1 per cent. He also forecasts a rise in salaries, in the income available for consumption in the private and public sector, from a drop of 1 per cent in 2013 to a rise of 1.4 – 1.5 per cent next year. At the same time, Negritoiu also stated that the banking system could grow by “a Romanian bank” or even “a development bank” and considers that it is pointless to waste resources in this way considering the evolution registered by banks that appeared after 1990.
Daniela Bodirca, Vice President UniCredit Tiriac, has a different opinion, pointing out that next year Romania will register a lower economic growth, this year the growth having been positively influenced by the very good agricultural results. Nevertheless, a higher absorption of EU funds would counteract this effect. “In our opinion the outlook for 2014 is not encouraging. On the other hand, investments had a negative contribution in the GDP and here we should raise question marks, because with these developments we could have medium and long-term economic development problems,” she added.
In her opinion, bearing in mind this year’s macroeconomic indicators one can say Romania has overcome the crisis’s most difficult part, but the evolution remains below the potential.
Likewise, Bucharest Stock Exchange (BVB) General Director Ludwik Sobolewski stated that the Romanian economy is too expensive and because of this it has a low degree of competitiveness, the same thing being relevant for the capital market. He pointed out that Romania needs an economic growth of over 4 per cent in order to partially recover the difference that separates it from developed EU states.
In his turn, National Bank of Romania (BNR) Deputy Governor Bogdan Olteanu said that the savings rate in Romania saw a significant increase since 2008, but we should not forget that this development comes after two decades when the rate was extremely law, Agerpres reports. The BNR official appreciated that there must be found an alternative financing solution for the banks, a solution to guarantee the funds, and he mentioned the new law drafted by the BNR to help the banks in this respect, by allowing them to issue bonds guaranteed by mortgages.
This draft law will be soon sent for consultations to bankers, international partners and the government, its aim being to ensure a financing flow towards the banks, so that they can continue to give credits.
Romania joining the Single Supervisory Mechanism could make loans cheaper
The Deputy Governor also mentioned that Romania joining the Single Supervisory Mechanism (SSM) will mean a drop in banks’ funding costs and cheaper loans for the real sector of the economy. “To Romania, this means it has to get closer to a decision about joining the SSM before joining the Eurozone or waiting until after joining the Eurozone,’ Olteanu told Romania Financial Forum.
He added that the decision on the SSM will be revolutionary for Romania and it will not be taken by BNR, which is only a part of the process. Bogdan Olteanu also said that on the other hand banking regulations Europe wide in 2014 should be tighter and Romania is part of the European process leading that way, which could lead to higher costs and more difficult loan requirements.
He also stated that the public policies meant to lower the budget deficit and encourage savings can significantly contribute to the raising of the banks’ resources for crediting, thus counterbalancing the effects of financial deleveraging.