BNR: FDI harsh drop in November 2009

According to the data published by the National Bank of Romania (BNR) on Friday, the foreign direct investments (FDI) have dropped 900 per cent from EUR 975 M in November 2008 to EUR 105 M in November 2009. This is the most serious year-on-year FDI drop in the last 10 years, with the political instability worsening the capital flight that started in the emerging markets at the end of 2008, the analysts claim. In the first 11 months of 2008 the FDI stood at EUR 8.64 bln. Throughout 2009 the FDI dropped at an approximate rate of 45-50 per cent, with the developments registered in November putting a stop to that trend.

In January-November 2009 the capital participations, including the reinvested profit, stood at EUR 2.053 bln, in contrast to the EUR 4.66 bln registered in the same period of 2008. The intra-group credits had a contribution of EUR 1.773 bln, over twice smaller that the one registered in the same period of 2008. The FDI covered 81.7 per cent of the current account deficit of EUR 4.68 bln.

Current account deficit reaches EUR 4.68 bln

The same BNR data show that the current account deficit stood at EUR 4.68 bln in the first 11 months of last year, being 69.4 per cent smaller than the level registered in the same month the year before. Nevertheless, the contraction was smaller than the 72.2 per cent drop registered at the end of October. 'The trade deficit that totaled EUR 5.973 bln (66.5 per cent smaller than in the first 11 months of 2008) had a determining influence on the current account drop,' a communique of the central bank shows.

After the first 11 months the services continued to have a negative contribution (EUR 364 M) to the current account deficit, although in the similar period of 2008 they helped reduce the imbalance by EUR 528 M. In the January-November period of 2009 81.7 per cent of the current account deficit was financed by the foreign direct investments of non-residents. The FDI climbed to EUR 3.826 bln in the aforementioned period, the level nevertheless being less than half of that registered in the same period the year before (EUR 8.642 bln).

The medium and long-term debt stood at EUR 63.366 bln (80.7 per cent of the total foreign debt), up by 23.2 per cent compared to the level registered at the end of 2008. Most of the foreign debt's hike mainly consisted of the EUR 5.6 bln loan contracted from the International Monetary Fund.

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