No money for the taxman. Romania’s Finance Ministry struggles to find creditors following the new tax on banks

Sorin Melenciuc 28/01/2019 | 16:35

The Romanian Finance ministry has growing difficulties in finding buyers for the Romanian sovereign bonds as banks and other investors are showing little interest and demand higher interest rates.

On Monday, a new tender for 12-year RON 400 million sovereign bonds failed completely as investors showed little interest to finance the Romanian government.

Investors offered only RON 123 million and asked high interest rates, pushing the Finance Ministry to reject all bids.

Last week, three tenders for T-bills and sovereign bonds failed as investors showed little interest to finance the Romanian government.

Two weeks ago, a RON 400 million June-2023 auction went also poorly, with total demand of RON 328 million spread in a rather wide range.

The Ministry of Finance allocated RON 249 million at a 4..41 percent average and 4.43 percent maximum, while the average of rejected bids was 4.45 percent – considered by analysts “a weak auction both demand-wise and yield-wise.”

On Monday, Romania’s sovereign 10-year bonds yield, a barometer for the cost of financing in the economy, reached a 7-month high of 5.17 percent.

 New taxes but no budget

Running out of revenue sources, the government has recently introduced a tax on bank assets of 0.3 percent from January 1st, 2019, and capped the retail and corporate gas price at RON 68/Mwh.

The government also imposed special taxes of 2 percent of turnover on energy firms and 3 percent on telecom companies.

The Ministry of Finance has not yet released a budget project for 2019 and many experts say it has no money to finance its soaring spending on public servants’ wages and pensions.

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