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Coface predicts 4-pct inflation rate and 5-pct budget deficit this year

Coface rating company predicts Romania's inflation rate will reach 4 percent this year compared to 4.8 percent in 2009, while the budget deficit is put at 5 percent of the GDP against 6 percent last year, Cristian Ionescu, Country Manager Coface Romania said on Wednesday.

According to the company's projections, the trade balance will reach minus 13.6 percent, while the current account deficit will stay at 10.4 percent compared to 9.5 percent in 2009, with the external debt expected to rise up to 62 percent of the GDP against 55.4 percent reported last year.

'This year, and especially the second half will see a rebound in economy driven by the upturn in Western Europe, especially in France and Germany, as well as by the international revival, supported by positive signals from the United States and the emerging countries. Romania's economy may rise by 1 percent this year,' Cristian Ionescu pointed out.

He underscored the industrial sector and exports will support the economic growth, adding that the private sector would be very affected by the crisis in the first six months of the year, with the number of bankruptcies to rise significantly.

'We will see more companies going bankrupt in the first half of the year, while firms will survive the crisis until mid-year even if they have liquidities. The private sector will continue to be affected by the shortage of liquidity, especially as foreign investors have downgraded Romania's country risk rating and banks will extend loans based on the 2009 balance sheets, which are rather unsatisfactory, and assure us they will grant even less loans this year than in 2009,' Cristian Ionescu said.

He underlined Romania will have to settle some problems with regard to the aid granted to companies, such as the VAT refund procedure, especially as this spans over a very long period of time, from nine to 12 months, and the penalties the state may charge over this period can reach even 36 percent of that amount.

'In other words, if a company must have 100,000 euros refunded and has to pay 100,000 euros to the state and it fails to do so, the debt rises by 36 percent for that company, which is absolutely unacceptable,' Cristian Ionescu underscored.

He said the recovery rate of the overdue loans for the companies like Coface has dropped substantially from a success rate of 80 percent to 54 percent, while overdue payments went up threefold in December 2009 year-on-year. Loans with maturity dates exceeded by 90 days account for 75 percent of the total overdue loans, with over 700,000 people being in the red.

Sursa: http://www.agerpres.ro

Tags: percent loans deficit coface