BURSA 26.01.2017

CĂLIN RECHEA (translated by Cosmin Ghidoveanu)
 
mărește imaginea
     Investment bank Lehman Brothers announced its default on September 15th 2008, and has forced the global authorities to acknowledge the beginning of an unprecedented crisis.
     Two months later, the Romanian National Forecast Commission (CNP) published the long term autumn prognosis, wherein it estimated the evolution of the main macroeconomic indicators until 2020.
     Thus, the nominal GDP was supposed to increase 14.6% in 2009, compared to the previous year, and in 2015 it was supposed to increase to 1089 billion, after increasing 115.7% compared to 2008 (see chart 1).
     By 2020, the nominal GDP was supposed to increase three times, to 1590 billion lei. Unfortunately, reality had other plans and proved to the Romanian Authorities, including to the National Bank, that it is not enough to ignore a global crisis for it not to touch you.
     According to data from the National Statistics Institute (INS), calculated according to the new European account system (SEC 2010), the nominal value of goods and services in the economy decreased 2.6% in 2009 over the previous year, to 510.5 billion lei, and the discrepancy from the CNP forecasts increased continuously until 2015, even if the European regulations allow including in the GDP estimates concerning the grey market and black market sections of the economy.
     No one demands and expects forecasts that would match reality perfectly, because "making forecasts is extremely difficult, especially for the future", like renowned physician Niels Bohr once said.
     But radically different forecasts in a period of approximately two months?
     It would seem that is possible too. Between November 2016 and January 2017, CNP found new "engines" for the economic growth in the next four years. The nominal GDP will not be 977.2 billion lei in 2020, but 1,014 billion, while this year's amount will be 7.8 billion higher than the initial forecast, of 807.4 billion (see chart 2).
     But the miracle doesn't stop there. Through a simple "adjustment", probably, the real economic growth will not slow down to 4.3% in 2017, down from 4.8% in the previous year, and will instead speed up to 5.2% and will match perfectly the hypotheses used in building the budget.
     Then comes a new acceleration, to 5.5% in 2018, and the annual "growth" will stabilize at 5.7% in the last two years of the forecast period.
     To presidential advisor Cosmin Marinescu, the forecast of a growth rate of 5.2% in 2017 is unrealistic, according to an interview he recently granted news.ro: "It is unclear why the forecast has been revised upwards, after just two months, de from 4.3% to 5.2%", the presidential advisor said.
     In "The report concerning the macroeconomic situation in 2017 and its projection for the 2018-2020 period" it is stated that the basic principles of the draft budget are "transparency, effectiveness, predictability, prudency and performance", and the estimates "have been made using the common methodology and agreed upon by the 28 member states".
     If the same methodology has been used for the autumn and winter forecasts of the National Prognosis Commission, where do those major differences come from, especially when it comes to the real economic growth?
     Liberal senator Florin Cîțu later challenged the "construction" of the budget on his blog, where he said that "the budget is not built based on the autumn forecast of the CNP, as provided by the law, but based on the winter forecast", as it "has been published approximately two months earlier than was normal". Cîțu also accuses the CNP of having "revised" its forecasts in order to match "the vision" of PSD leader Liviu Dragnea, and says that "I will be asking my colleagues in the PNL to bring a criminal lawsuit against the executives of the CNP". "If it is right, we will all get burned", the PNL senator concluded.
     But the extremely optimistic estimate of the evolution of the economy in the next four years is not the only weak spot of the budget. Even if we overlook "transparency" easily, what about prudency? Hasn't the CNP learned anything, and more so our authorities, from the lesson of the crisis that began in 2008? Where does this optimism concerning the evolution of the economy over the next four years come from, when the global trade "landscape" is precisely in the process of undergoing a transformation following the victory of the Trump administration, and the problems of the EU are going through a new phase of worsening?
     The report also states that the "potential GDP will increase at an annual growth rate of 5.1%", whereas "the gap between the GDP and the potential GDP levels expressed as a percentage of the potential GDP will be closed in 2018". But don't we have the opinion of some NBR officials, that the output gap was closed as early as 2013 or Q2 2016?
     Aside from "faith", we must not forget that the methods for estimating the difference between the potential GDP and the real GDP are more or less mechanical, as they are heavily influenced by the growth of lending. Does the new government believe that we are back to the period of "growth" based on cheap loans and ultra-lax lending norms?
     It would seem so, because the report concerning the macroeconomic situation in the next years reflects an unrealistic approach of the evolution of borrowing costs.
     The governmental report also shows that "the yields of government bonds have followed a downward trend in the first three quarters of 2016, and then rise was mostly due to a number of foreign events".
     Unfortunately, we are not given a forecast of borrowing costs until 2020. Even though the president of the PSD has participated in the festivities for the instatement of the new president of the United States, the "expertise" he gained from that has not included the transparency provided by institutions such as the Congressional Budget Office (CBO) or Government Accountability Office (GAO), even though their forecasts are unrealistic as well.
     On the other hand, there are some signals sent by "reality", even here in Europe. The yield of the 10-year German government bonds increased 141.6% from the beginning of the year, to 0.46%.
     Why would that happen to the strongest economy of the continent? Has investors' confidence disappeared or is the world getting ready for a rise in borrowing costs?
     Yes, the world is getting ready for that, because confidence in major central banks has pretty much disappeared and inflationary pressures are forcing them to raise the interest rates.
     In that context, the economic basis of the Romanian budget for 2017 and the subsequent years is being systematically eroded, just like the cold erodes the mortar of homes built during winter, just to avoid missing any second of the "opportunity" provided by the irresponsible extension of the First Home program.
     Wouldn't the national budget be more realistic if it were drawn up through divination, rather than being "built" based on official "forecasts"? 
 

 
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Aceeasi sectiune (English Section)
THE COURT RULED THAT SOME CONTRACTS CONCLUDED BY CELL PHONE COMPANIES INCLUDE ABUSIVE CLAUSES
AFTER THE TRANSACTION BETWEEN BANCA TRANSILVANIA AND BANCPOST
PATRICIA SUÁREZ RAMÍREZ, THE PRESIDENT OF THE ASSOCIATION OF FINANCIAL CONSUMERS OF SPAIN:
THE QUICK RISE OF THE INDEX WHICH SETS THE TREND FOR INTEREST RATES ON LOANS DENOMINATED IN LEI ISN'T STOPPING
THE PARLIAMENT IS ASKING FOR INFORMATION CONCERNING THE INVESTIGATIONS WHICH OMV PETROM HAS BEEN SUBJECTED TO
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English Section
11.12.2017
THE COURT RULED THAT SOME CONTRACTS CONCLUDED BY CELL PHONE COMPANIES INCLUDE ABUSIVE CLAUSES
     * The Bucharest Court of Appeal Bucharest yesterday ruled that RCS&RDS has abusive clauses in its contracts
     * The ANPC has also won the initial lawsuit against Telekom România
     * Vodafone has lost the case in the court of last instance against the ANPC
       The Courts have decided that some contracts concluded by the telephony companies contain abusive clauses. The Court rulings were rendered last year, as well as in 2016, but the argumentations have been formulated relatively recently.  details
08.12.2017
     The hope of an accession as quick as possible by Romania to the Eurozone was dealt a heavy blow precisely on the National Day.  details
06.12.2017
AFTER THE DRAFT HAD BEEN PUBLISHED IN OCTOBER
     * Gheorghe Șimon: "The royalties law will be voted in the Parliament in February next year"
     * Ministry of the Economy: "We will establish royalties which are fair both for the state as well as for the business sector"
     * Daniel Cătălin Zamfir, PNL: "I found out that there are companies that have never, take note, never paid even one leu in royalties to the Romanian state, even though they have been exploiting resources for over 20 years"
     * Last year, the Court of Auditors announced that Romania lost 1.4 billion dollars, because the ANRM established the oil royalties in a flawed manner
       The entire legislative package concerning the regulation of the system for the regulation of the mineral, oil and hydromineral resources will be revised and will be voted in the Parliament in February next year, Economics minister, Gheorghe Șimon, announced yesterday, after the debates of the Economic, Industries and Services Commission of the Senate.  details
28.11.2017
AFTER THE TRANSACTION BETWEEN BANCA TRANSILVANIA AND BANCPOST
     * Customers with borrowers in CHF from Bancpost are waiting for a conversion program with a discount
       After moving to second spot last year in the domestic banking system, through the acquisition of Volksbank, Banca Transilvania (BT) ends up on equal footing with BCR, taking over Bancpost, from Greek group Eurobank.  details
27.11.2017
     * MAKE, BURSA: "I want the new CEO of the BSE to participate in the drafting of a new strategy for the development of capital market"
       On Thursday night, "BURSA" received the Award for the promoting of high standards of corporate governance on the capital market, as part of the 2017 Capital Market Awards Gala, organized by the Association of Brokers.  details
24.11.2017
     * Ciprian Păltineanu and Adrian Tănase, scheduled for meetings with the board
     * Both candidates seem to be closet o the group in the shareholder structure of the BSE
     * George Butunoiu is in charge of recruitment
     * The waiting list may include a few foreigners, including former BRD executive Jacek Panczyk
       According to some market sources, banker Ciprian Păltineanu and Adrian Tănase, Chief Investment Officer at NN Pensii România, will hold interviews in the beginning of next week with the Board of the BSE, after Ludwik Sobolewski's term expired in the summer.  details
23.11.2017
PATRICIA SUÁREZ RAMÍREZ, THE PRESIDENT OF THE ASSOCIATION OF FINANCIAL CONSUMERS OF SPAIN:
     * The head of the ASUFIN: "The ruling of the Supreme Court of Spain in which the Andriciuc case has been invoked will be part of the Spanish case law and the lower courts will be required to apply the principle that underlies this decision"
       The ruling issued by the Court of Justice of the European Union (CJUE) in the Andriciuc versus Banca Românească case represents a great advantage for Spanish debtors, said Patricia Suarez Ramírez, the president of the Association of Financial Consumers in Spain (ASUFIN), as part of a response recently sent to BURSA.  details
22.11.2017
     * Dragnea: "Those who are against me are hiding behind institutions"
       The president of the Chamber of Deputies, Liviu Dragnea, leader of the PSD, thinks that his enemies are hiding behind some institutions, "they crucify people", and the real stake is "the blocking of the Laws concerning the Justice system".  details
21.11.2017
     The Council of the European Union and the European Parliament have sent to the ECB, in the beginning of this year, a request concerning the sending of some proposals to revise the framework for managing crises.  details
20.11.2017
ANPC STRIKES AGAIN
     * BCR: "Ongoing contracts no longer contain the clauses that have been subjected to examination"
     * Sources: "ANPC has 6 lawsuits against BCR, which will lead to enormous losses for Erste Bank if BCR loses in court"
       After forcing Raiffeisen Bank to eliminate the unfair practices from the loan agreements, the National Consumer Protection Authority (ANPC) strikes again, this time the biggest bank in the system. BCR lost in the court of first instance, against the ANPC, in a class action lawsuit concerning abusive lending clauses.  details
16.11.2017
THE QUICK RISE OF THE INDEX WHICH SETS THE TREND FOR INTEREST RATES ON LOANS DENOMINATED IN LEI ISN'T STOPPING
     The 3-month ROBOR rate, which is used to calculate the interest rates, the majority of the loans denominated in lei, has jumped past the 2% psychological level, and yesterday reached 2.06%, up from Tuesday's 1.92%, according to data from the NBR.  details
16.11.2017
THE PARLIAMENT IS ASKING FOR INFORMATION CONCERNING THE INVESTIGATIONS WHICH OMV PETROM HAS BEEN SUBJECTED TO
     * Minister Toma Petcu, former ministers Răzvan Nicolescu and Victor Grigorescu, the representatives of the state in the executive structure of OMV Petrom and Mihai Busuioc, the president of the Court of Auditors were heard today in the Investigation Commission
       The executives of OMV Petrom mentioned, in a letter addressed to the parliament, the existence of four lawsuits brought by the National Energy Regulation Authority (ANRE) and of seven audits by the Authority, between 2012-2017, as the recent request for information by the Commission for the Investigation of the activity of the ANRE targeted a period of 12 years, from 2015 to 2017.  details
14.11.2017
THE EURO AT AN ALL-TIME HIGH
     * Vasilescu: "We cannot say that the currency market has gone off the rails, the exchange rate has moved 4 bani in 4 days"
     * "Perhaps it is a simple coincidence the fact that on November 8th was approved the Emergency Ordinance of the Fiscal Code and it was also on that day that the Euro rose past 4.6 lei", said Mr. Vasilescu
       The leu yesterday reached a historic low against the Euro, 4.6495 lei/Euro, up 1.05 over the previous meeting, marking the fourth day where the exchange rate was above 4.6 lei.  details
13.11.2017
     In October, the Romanian Commercial Bank, through Schoenherr și Asociații, has submitted, with the County Court of Bihor, a request for the insolvency of the European Drinks group, owned by the Micula brothers. That group includes: European Drinks, Transilvania General Import-Export, European Food, Starmill SRL, Scandic Distilleries SA, Rieni Drinks.  details
10.11.2017
DUMITRU COSTIN (BNS):
     * The executives of OMV Petrom, summoned to appear in the Parliament for the third time
     * Sevil Shhaideh and Radu-Spiridon Cojocaru, the representatives of the state on the Supervisory Board of OMV Petrom, also called in for hearings
     * Costin: "We have notified the Audit Body of the Prime-Minister"
       The management of OMV Petrom, namely Mrs. Mariana Gheorghe, as well as the representatives of the Romanian state on the Supervisory Board of OMV Petrom, Sevil Shhaideh and Radu-Spiridon Cojocaru will be invited to appear in the hearings on the Investigation Commission for the activity of the ANRE, the members of the Commission decided on Thursday.  details
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