Romania’s central bank issues more warnings against planned “greed tax”

The emergency ordinance 114/2018 particularly the “greed tax” levied on financial assets will have a profound negative impact on the banking system but will also bear significant macroeconomic consequences given the weaker efficiency of the monetary policy, according to a report drafted by Romania's National Bank (BNR), quoted by Hotnews.ro. Overall, the impact on the GDP is negative, the report also warns.

Ruling coalition leader Liviu Dragnea has learned about the report on Thursday last week and was surprised, according to opposition MP Florin Citu quoted by Bursa daily.

BNR estimates the cumulated negative impact on the GDP at 2 percentage points, Citu claimed. Finance minister Eugen Teodorovici and PM’s advisor Darius Valcov have allegedly hidden the report from Dragnea, Citu said, to have higher bargaining power against those impacted by the ordinance. But the impact is much broader, invalidating the scenario used by the Government for the budget planning, Florin Citu explained, which might weaken the ruling coalition’s position in the dispute with Presidency on the 2019 budget planning.

Hotnews.ro revealed more technical details of the BNR report. The impact on the banking system was made public in previous statements, as well as the effect of weakening the efficiency of the monetary policy. But the report, as quoted by Hotnews.ro, also points to vulnerability to speculative attacks against the local currency (given central bank’s weaker ability to address such attacks).

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