Press Review - December 20, 2018

12.20.2018 By Oana Gavrila

Bucharest Shares Plummet Wednesday, Wipe Out Year's Gains

The main index of the Bucharest Stock Exchange lost 8.6% by midday Wednesday, in just two hours of trading, losing the entire year's growth on concerns over government plans to impose new taxes.

Among the hardest hit blue-chip companies were Banca Transilvania (-20%), BRD (-16%), and Romgaz (-8%).

Finance Minister Eugen Teodorovici on Tuesday evening announced new taxes on bank assets, energy and telecom companies, which he intends to use to patch the holes in the 2019 budget.

The government also seeks to cap power and natural gas prices. It also hit private pension administrators, the main institutional investors on the Romanian capital market, by planning to allow contributors to withdraw their retirement money early.

Leu Falls Vs Euro, Nears 4.66 Threshold

The Romanian leu on Wednesday depreciated against the euro, showing a midday reference rate of 4.6571 units, down 0.2% on the day.

The leu stood at 4.6478 units against the euro, its highest rate since September 18.

The leu also lost ground to the US dollar Wednesday, standing at 4.0846 units from Tuesday's 4.0820 units.

President: Government’s Planned Fiscal Measures Plunges Economy into Chaos

President Klaus Iohannis said Wednesday the new fiscal measures announced by the Government will have serious negative effects on the economy, were not discussed and urged the administration to rethink its plans.

He reminded that Prime Minister Viorica Dancila vowed her Cabinet would not introduce new taxes, while the finance minister announced several new taxes in Tuesday’s announcement.  

“These measures will mess with the entire economy and with the budgets of all Romanians. I call on the Government to change its mind, to discuss the decree and analyze it with unions and employers,” he added.

Hungarian Minority Party Won't Back No-Confidence Motion

The leader of Romania’s main Hungarian minority party UDMR, Kelemen Hunor, said Wednesday the party's lawmaker would not back the opposition's no-confidence motion.

The motion will be put to the vote Thursday and Kelemen said UDMR lawmakers would not cast votes. He said opposition parties have failed to present an alternative to the current ruling coalition and the opposition “is either not prepared to govern or does not want to.”

“At this time it would be impossible to vote for a no-confidence motion in these conditions, as it would be almost impossible to vote against the no-confidence motion, because it would mean that we agree with what the Government is doing. We are not talking about parties or the ruling coalition, the motion is referring to the Government. Our decision is to be present and not vote,” said Kelemen.