Meagre FDI sucked up by banks

The real economy is increasingly poorly financed given that foreign direct investment has halved in the first quarter to 754 million euros, two thirds of which went to the banking sector alone, where the money is not fuelling loans but only allows banks to ‘stomach’ losses caused by uncollected financing granted in the past.

With the state unable to find funds to help the real economy and bankers saying that resurrection of lending is hindered by the lack of demand, foreign investment remains the only hope for financing able to bring back growth. NBR data, however, show that this stream is narrowing, too.

Foreign direct investment totalled merely 754 million euros in the first quarter, half the level in the same time of 2009. Moreover, most of these amounts went to the financial sector, given that banks alone absorbed half a billion euros to boost equity capitals in the first quarter. The data is not part of a uniform report, so an exact comparison is not possible.

Banks increased their equity capitals by 500 million euros in 2009, while foreign direct investment stood at 4.9 billion euros.