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