Economic overview - January 2010

20 Februarie 2011

RAIFFEISEN BANK S.A.

 

Highlights

Technical missions from the IMF and the European Commisison had a positive review on policies pursued by Romanian authorities in the last period, saying that most of the agreed targets were fulfilled. Accordingly, Romania has succesfully completed the financial agreements initiated in 2009 with the two international institutions. Romanian authorities decided not to draw the last tranche from the IMF (EUR 1 bn) and to use only the last instalment from the European Commission.

Romania will enter in new 2-year precautionary agreements with IMF/EC. Under these precautionary agreements,  Romania will have access to a safety fund of EUR 5 bln (EUR 3.6 bln from IMF and EUR 1.4 bln from EC). The funds  would be accessed only in an emergency situation. Also, a financial agreement amounting to EUR 400 mn would be concluded with the World Bank.

Central bank remained on hold at the last monetary policy meeting on 3 February keeping the monetary policy rate unchanged at 6.25%. Ratios for minimum reserve requirements were hold unchanged at 15% (for banks' liabilities in RON) and 25% respectively (for banks' liabilities in FCY). Central bank revised slightly upward the inflation forecast for end-2011 (to 3.6% yoy from 3.4% yoy in the previous forecast from November).

Investors' interest in RON bonds remained high. The Finance Ministry succedded to borrow a lot of money in the local market at the last auctions, at lower yields and for longer tenors.

Decline in interbank interest rates accelerated in January even for longer tenors (ROBOR 6 and 12-month). However, the liquidity drained by the Finance Ministry from the money market pushed the interest rates up in the last period.

 

Key events of the month

Demand for loans remained low in Q4 2010

No data is available regarding the amount of new loans originated by the banking system. Available data refers only to oustanding amounts at the end of each month. In this case, we think that the queries of the Central Credit Register can be used as a useful indicator for dynamics of new loans originated by banks. The indicator remained at a low level in the ending months of 2010 (seasoanlly adjsuted data). This means that demand for loans stemning from households and companies remained weak.

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The tricky lag LUCIAN CROITORU Adviser to the Governor - BANCA NAŢIONALĂ A ROMÂNIEI Lucian Croitoru, Adviser on monetary policy issues to the National Bank of Romania Governor, talks about the NBR’s next moves and explains why the decrease ofthe policy rate hasn’t been reflected into lower interest rates on bank loans. mai mult... The turnaround CRISTIAN SPORIS Secretar de Stat - MINISTERUL ECONOMIEI ŞI FINANŢELOR Cristian Sporis, Secretary of State at the Ministry of Public Finance, in charge with the national treasury and public debt, explains how the state managed to borrow money at the lowest costs in the last seven years and how it turned from a clear market taker into a player with a strong position on the market. mai mult...