While politicians are fighting over the new government, foreigninvestors' perception is deteriorating again, at the very momentRomania most urgently needs money. The prolonged political crisishas rendered Romania more risky than Hungary and Croatia in theeyes of foreign investors, with the risk premium for foreignfinancing climbing by one half of a percentage point in the pastmonth. Quotes of CDSs for Romania, gauging the cost of defaultrisks, rose to 2.55%, while they stand at 2.01% in the case ofHungary. Had Romania issued euro-denominated bonds in lateSeptember carrying a 6.5-7% interest rate per annum, it would nowface payments at least 0.5% more expensive. Under thecircumstances, the state urgently needs the 2.5bn euros from theIMF and the EU to finance its budgetary deficit. At the same time,the rising country risk premium is driving up the cost of foreignborrowing by banks or companies.
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