Romanian Finance Ministry disputes with central bank over RON depreciation, tax on assets

The Romanian Ministry of Finance and the National Bank of Romania (BNR) have disputed on Friday on a harsh tone over the RON steep depreciation and the tax on assets.

On Friday after-noon, the Ministry of Finance posted on its Facebook page a commentary saying that the central bank “is the institution that has to establish and supervise the observance of the currency regime and to develop the exchange rate policy.”

“For the application of the exchange rate policy, the NBR sets the exchange rates for its own foreign exchange operations and draws up the balance of payments and other papers on the international investment position of Romania,” the ministry said, in a moment when the Romanian currency is depreciation every day against major currencies.

The commentary suggests that the central bank has to support the RON and that the NBR didn’t respect the laws by allowing the currency to depreciate.

The Romanian currency fell deeper against the European single currency on Friday as investors begin to be more skeptical about the local outlook and due to the fast deterioration of the trade and current account balance. The exchange rate rose by 0.2 percent to 4.7569/EUR, an all-time low, National Bank of Romania (BNR) data show.

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Compared to the end of 2018, the RON lost 2.2 percent of its value.

The central bank has reacted on Friday evening, suggesting that the Ministry of Finance didn’t respect the law by imposing measures that affect the banking system without consulting the central bank.

“The National Bank of Romania also wants “loyal cooperation with the Ministry of Public Finance to harmonize fiscal and monetary policies for the benefit of citizens and the business environment.” the central bank said, in a press release.

“Such collaboration requires a prior consultation of the NBR when decisions are made which affect the monetary policy of the central bank and the country’s financial stability,” the NBR added.

On Friday evening, Fitch Ratings, one of the three major global rating agencies, said that it has revised the outlook to negative from stable on BCR and BRD-Groupe Societe Generale, two of the largest Romanian banks, due to the new special tax on assets imposed by the government.

The arating agency warned that it estimates a greater risk of government intervention in the Romanian banking sector, in case of a sovereign default.

The Romanian government has recently introduced a tax on bank assets of 0.3 percent from January 1st, 2019, calculated at the current ROBOR 3M-6M level.