Romanian leu hits all-time low against euro

The Romanian currency has hit an all-time low of 4.6722 against the euro in the wake of a rate-setting meeting of the Romanian Central Bank (BNR) and comments by its governor, Mugur Isărescu regarding a recent, so called “greed tax” introduced by the government via emergency ordnance, business news portal Ziarul Financiar reoprts.

“We have also been surprised by this craziness. The main reason for the dismay is that (the new tax) was not discussed with the industry. You talk with the banking industry, not drop such an incomprehensible bomb like that just before Christmas”, Isărescu said at a press briefing following the year’s first rate-setting meeting of the Central Bank. BNR left its base rate unchanged at 2.5%.

Romanian Finance Minister Eugen Teodorivici announced on December 18 plans to introduce a so-called “greed tax” on telecoms companies, banks and energy utility firms.

Telecoms and energy utility companies will be subject to an additional 3% tax on their revenues and energy companies will also see their prices capped at RON 68 ($16.6) per MWh. The extra tax on banks will be a progressive tax based on the three- and six-month Romanian inter-bank offered rate (ROBOR) and with these rates currently at 3.04% and 3.34% respectively, their extra tax will be 0.9% on assets.

The additional taxes are necessary to cover the government’s already announced plans for wage and pension increases. According to estimates of the Romanian financial press, these taxes will bring in an additional RON 10 billion ($2.45 bln) to the budget.

Meanwhile, Romania still has no budget for the year, the draft of which should have been submitted to Parliament by November 15.

Title image: Romanian Central Bank Governor Mugur Isărescu.

Author: Dénes Albert