Financial crisis dams FDI flow in Romania, PwC says

The global financial crisis is chewing on Romania's foreign direct investments (FDIs), on the money sent by Romanian workers employed outside the borders and on the country's exports, explained Emilian Radu, partner of PricewaterhouseCoopers (PwC), the world's largest professional services firm, NewsIn informs.

The PwC official thinks the government should rally the internal demand, which can be supported through external financing. While a loan from the International Monetary Fund would confer credibility to the Romanian economy, the banking system should be the one taking the first step. Thus, the central bank (BNR) needs to stabilize the exchange rate and diminish mandatory reserves and the key interest.

Recently the central lender said that keeping such a high level of required reserve ratio (40 percent for foreign currency-denominated liabilities and 18 percent for lei-denominated liabilities) has worked as a safety belt for Romania's banking system, cushioning it from a severe downturn, with the crisis erupting in Romania and the lending activity put on hold.

Conversely, banks should rationally lower crediting costs to stir the purchase power, Radu said.

He added that companies who managed to look beyond price cuts and have a long time-horizon perspective would have countless business opportunities in South-Eastern Europe, where there would be a sustained activity on the mergers and acquisitions segment.

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