FDI – FDI in Romania tumble 22.3% last year reaching EUR 7.07bn

Foreign direct investments in Romania slumped 22.3 percent over last year, covering only 41.9 percent of the current account deficit; most of the FDI came from intra-group loans, the Central Bank of Romania (BNR) announced today.

FDI in Romania stood at 7.069 billion euros last year while in 2006 FDI reached 9.1 billion euros with the help of Erste Bank which paid 2.2 billion euros for the majority stake in Banca Comerciala Romana in October 2006, covering 89.6 percent of the current account deficit over 2006.

BNR revised upwards the current account deficit in 2006 so that its percentage within the gross domestic product, initially estimated at 10.3 percent, hiked to 10.4 percent in 2006. The GDP stood at 97.718 billion euros.

The coverage level of the current account deficit through FDI dropped slightly in December from 43 percent over the first eleven months of 2007.

The intra-group loans represented 54.1 percent of the FDI in 2007. The rest of 45.9 percent represented participations to capital and the reinvested profit, according to BNR.

The central bank estimates a leveling of the current account deficit's percentage within the GDP this year or even a slight narrowing compared to 2007. However, international observers are not as optimistic as the central bank. The rating agency Fitch estimated a widening of Romania's current account deficit to 17.5 percent of the GDP this year.

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