Romanians and companies in Romania are paying again the toll of the political crisis made worse yesterday by the toppling of the Boc II Government after the non-confidence vote of the Parliament.
The depreciation of the RON and the increase in the risk premium for foreign funding were the main effects of yesterday’s political shock.
The forex market saw the exchange rate reach 4.30 RON/EUR and only NBR’s interventions managed to keep rates at 4.29 RON/EUR for a while, which went back up after 5 p.m.
Romania is now without a government one month before the IMF mission comes back to Bucharest to check the fulfilment of the fiscal and legislative reform commitments on which the release of the 1.5 billion-euro tranche scheduled for December depends.
“There is a risk that the agreement will be breached, which would translate into a change of the risk perception of Romania. The agreement with the IMF is our stability umbrella, it is a benchmark we relate to at this moment,” says analyst Laurian Lungu, adding the exchange rate pressure will be felt because the exchange rate is very quick to react to such events.
As far as the business environment is concerned, the collapse of a government thought to have done a very poor job of managing the crisis, does not change much, it only serves to make the disappointment worse.
“Romania was not governed and is now officially not governed. Nothing happened reality-wise, it was only made official. The end of the year, when a certain rebound in sales was expected will probably be affected by the uncertainty that average people feel,” says Dan Sucu, Mobexpert group owner.
The political flexibility of the Fund will be tested again because the authorities have committed to enact the new pension legislation by October 30, while the fiscal responsibility law has to be voted by the Parliament by November 30, which should put an end to countless budgetary adjustments and finally put in place multi-annual budgets, based on a medium-term fiscal strategy.
The politicians, however, are too busy with the negotiations for a new government and with the final preparations for the presidential campaign.