Raiffeisen president: Political crisis might be a price worth payingPublish date: 15-06-2010
Local bank officials are not staking on the Government being toppled by the no-confidence motion, banking environment representatives stated, quoted by HotNews.ro. However they are not completely ruling out that possibility, in which case we could see a rise in credit default swaps. Basically the banks reproach the officials for their lack of a coherent reform program and of the desire to put the economy back on an upward trend.
Raiffeisen Bank President Steven van Groningen explained why a political crisis could be a price worth paying for the austerity measures that the Government wants to impose. "If the price (of the austerity measures - editor's note) is a political crisis maybe this price is worth paying." However "it would be similarly unpleasant in case taxes would have to be hiked. The Government is in a pretty difficult situation. The encouraging thing is that maybe a third party should appear in order to help it out," Groningen added.
In the financial report issued yesterday, ING analyses today's possible political developments. "The Finance Minister is stating that the recent failed tenders are the result of the high yields - around 8 per cent - that the participants asked for. He points out that the Finance Ministry could not have reacted differently since neither the key interest rate nor the country rating were modified. Sebastian Vladescu states that they have a liquidity reserve and "we are fighting the banks."
These statements seem odd (especially the latter) and we underline the fact that the yield hike is not entirely surprising considering that the IMF said in early May that the public deficit will be moving towards 9.1 per cent of GDP in the absence of corrective measures - a level that is far from the 5.9 per cent target agreed with the IMF at that time - and that a change in the need for financing could generate upward pressure on the interest rates for state bonds," Vlad Muscalu, ING Bank economist, stated.
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