bne - 19.05.2010
Data published yesterday by the National Bank of Romania (BNR) shows that the foreign direct investments (FDI) totalled EUR 754 M in Q1, a level almost twice lower than the one reported in the same period of 2009 (EUR 1.475 bln), Economic Daily reported.
According to the central bank, the foreign investments financed 50.1 per cent of the current account deficit of EUR 1.506 bln reported in Q1. The FDI reported in the aforementioned period consisted of capital participations (EUR 650 M as against EUR 993 M last year) and intra-group credits (EUR 104 M as against EUR 482 M last year). The FDI reported last year totalled EUR 4.89 bln, half the value reported in 2008, and covered 96.9 per cent of the current account deficit. In 2008, non-residents' FDI totalled EUR 9.49 bln.
The current account deficit stood at EUR 1.506 bln in Q1, up by 65.5 per cent compared to the same period last year, the development being determined by the current transfers balance drop of 62.8 per cent compared to January-March 2009. The current transfers balance dropped 2.6 times from EUR 1.219 bln in Q1 of last year to EUR 454 M in the same period this year.
During the period analysed, the service sector had a negative contribution of EUR 273 M compared to only EUR 64 M in the same period of 2009, a contribution mainly determined by the tourism-travel sector (- EUR 119 M). At the same time, the revenue deficit stagnated at EUR 518 M in January-March. The medium and long-term debt stood at EUR 70.157 bln on March 31 (81.5 per cent of the total external debt), up by 6.9 per cent compared to the end of last year. The short-term external debt stood at EUR 15.87 bln (18.5 per cent of the total external debt) at the end of March, up by 8.8 per cent compared to December 31, 2009. The debt service rate for medium and long-term external debt stood at 34.6 per cent of the total external debt in Q1 of 2010 compared to 33.1 per cent in 2009. Compared to December 31, 2009, on March 31, 2010 BNR's official reserve covered 9.8 months of imports of goods and services.
OECD report, too optimistic
A report from the Organisation for Economic Co-operation and Development (OECD) shows that Romania has non-discriminatory foreign investment legislation and a modern fiscal system. Romanian businessmen and authorities nevertheless labelled the report's results as being too optimistic.
,,The results of the report are also due to the business environment's passivity and to compare Romania to those states is a dangerous process. It is even more dangerous because it uses a diplomatic language that has to be decrypted because otherwise it sends a wrong message to the public," Florin Pogonaru, president of the Association of Romanian Businessmen (AOAR), stated. On the other hand, Romania has received the best evaluation in South-East Europe when it comes to indicators of human capital policies. The OECD report claims that Romania is among the regional economies in which access to corporate financing is the most developed.
Irinel Cristu, secretary of state within the Ministry of Economy, Commerce and Business Environment, stated that as an EU member state Romania should compare itself with EU states, should have a high standard and the report's results should be treated with caution. On the other hand, presidential advisor Leonard Orban said that despite the progress that Romania made in its effort to join the EU, there are areas where many things still have to be done, opining that boosting Romania's competitiveness is a priority in the following period.
Direct foreign investments this year will be worth less than the EUR 4.89 bln posted in 2009, and authorities need to prove to investors Romania is a good place to do business, Foreign Investors Council (CIS) representative Dana Ciomag said at the presentation of the OECD report. Estimates by the CIS representative are less upbeat than those of authorities', considering that Lucian Croitoru, an adviser to National Bank of Romania Governor Mugur Isarescu, forecast last month direct foreign investments in excess of EUR 6 bln in 2010, slightly up from the roughly EUR 5 bln in 2009. In his view, there are many areas where Romania shows potential and which could help economic rebound, among which power and infrastructure projects.Source Bne www.businessneweurope.eu