Press Review - February 13, 2019

02.13.2019 By Oana Gavrila

Central Bank: Less Than 1% of Romanians Afford to Save Money

Less than one percent of Romanians can afford to save, the central bank's first deputy governor Florin Georgescu said Tuesday at a hearing in Parliament.

Addressing the ruling coalition's claim that banks don't finance Romanians, Georgescu explained people have low income and the distribution of income is defective, with gaps between the public and private sector.

“In 2017–2018, 36% or two million employees earned the minimum wage.

How many loans can one get at a monthly salary of RON1,200? Needs are high, the ability to borrow is low. 92% of employees earned less than EUR1,000 a month and only 2%, or 90,000 employees, earned more than EUR2,000 a month,” Georgescu explained.

Under these conditions, less than 1% of Romanians can afford to save. He said over 60% of people with deposits have an average of RON1,200 saved.

 

Central Bank Governor Tells Senators How ROBOR Index Works

The money market interest rate known as ROBOR was not manipulated, central bank governor Mugur Isarescu told members of the Senate's budget and finance committees at a hearing Tuesday.

Asked whether the rate was manipulated, Isarescu said no and went on to explain the rate is established among banks and it is not a cartel-type agreement.

The money market rate may oscillate only between 1.5% and 3.5% because the benchmark interest rate is set at 2.5% and the symmetrical corridor around the key rate is of one percentage point, Isarescu told senators.

“If the rate goes higher or lower, excess liquidity is drained,” he added.

Isarescu also reminded that he has said before the time of low interests has passed.

Romania's ruling coalition has repeatedly attacked the central bank recently, accusing it of raising interbank rates artificially. In late December last year, the government introduced a tax on bank assets conditional on interbank interest rates, a move that hinders the effectiveness of the central bank's monetary policy decisions.

 

President Accuses Ruling Party Of Populism Regarding 2019 Budget

Romanian President Klaus Iohannis said the country’s ruling Social Democrat Party (PSD) resorted to populism after its MPs voted to pass an amendment in parliamentary committees which cuts the Romanian Intelligence Service’s share of the 2019 budget.

In a statement issued on Tuesday, the president said that the measure “risks weakening” the country in areas of national security.

“PSD is resorting to populism again, which risks weakening Romania in the current geopolitical context marked by incertitude and intensification of risks towards NATO states. In a cynical gesture, the PSD chairman puts national security in opposition with healthcare,” he said.

The head of state also called the move “irresponsible” and appealed to the Parliament to respect budget allotments agreed by the country’s Defense Council for national security institutions in December 2018.

Iohannis also proposed supplementing the Health Ministry’s budget from money allotted for political parties.

Romania's government on Friday adopted the 2019 state budget, built on an economic growth projection of 5.5%, which critics said is overly optimistic, and targeting a deficit of 2.55% of gross domestic product.

According to the schedule decided by the Parliament’s standing bureaus on Saturday, the amendments will be reviewed by parliamentary committees on Monday, with the final vote in the combined chambers scheduled for Wednesday.

 

Vasilescu Withdraws Candidacy For Development Office Following President Refusals

Former labor minister Lia Olguta Vasilescu said Tuesday evening she has withdrawn her candidacies for the roles of regional development minister and deputy prime minister after her bid was rejected several times by President Klaus Iohannis.

Vasilescu announced that she made the decision following a discussion with Social Democrat Party (PSD) leader Liviu Dragnea, during which they convened that challenging the president’s refusal at the Constitutional Court would block the Cabinet role for at least another 45 days.

She said she would continue to serve her term in the Parliament as Dolj county MP.

The president last rejected the Government’s nomination of Vasilescu for the office of regional development minister on Thursday and requested the prime minister to propose a different candidate for the office.

This was the fifth time the president rejected Vasilescu for a cabinet role since mid-December 2018 when she was initially proposed for the position of transport minister.