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Country Risk Service Romania Updater

  • ID: 2101378
  • August 2016
  • Region: Romania
  • 22 Pages
  • The Economist Intelligence Unit
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The negative effect of tax cuts and of increases in wages and pensions on the 2016-17 budgets may be offset by strong GDP growth, improved tax collection and better absorption of EU funds. However, The Economist Intelligence Unit expects a widening of the budget deficit (ESA 2010 measure) this year and next, putting Romania in breach of EU fiscal rules in 2017.

Domestic political uncertainty ahead of the end-2016 parliamentary election will compound investor uncertainty about the impact on European markets of the UK's decision to leave the EU, and may result in exchange-rate volatility for the leu. Given these concerns and the outgoing government's pro-cyclical fiscal policies, the National Bank of Romania (NBR, the central bank) will pursue a cautious monetary policy.

The ratio of non-performing loans fell sharply in 2014-15, from 21.9% of total loans in December 2013 to 13.5% at end-March 2016, and is expected to fall to around 10% by 2017. Local subsidiaries of Greek banks account for 12% of banking assets, but have strong capital-adequacy ratios to protect depositors.

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Country Risk Service Romania Updater

Risk assessment
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk

Definitions
Sovereign risk
Currency risk
Banking sector risk
Political risk
Economic structure risk
Overall country risk

Central scenario for 2016-20: Political stability

Central scenario for 2016-20: Election watch

Central scenario for 2016-20: International relations

Central scenario for 2016-20: Policy trends

Central scenario for 2016-20: Fiscal policy

Central scenario for 2016-20: Monetary policy

Central scenario for 2016-20: Economic growth

Central scenario for 2016-20: Inflation

Central scenario for 2016-20: Exchange rates

Central scenario for 2016-20: External sector

Key risk indicators

Ratings summary

Quarterly indicators

International assumptions summary

Economic structure

Public finances

Exchange rates, interest rates and prices

Financial sector

Current account

International liquidity

Foreign payment and liquidity indicators

External trade

External financing requirement

External debt stock

External debt service

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