Romania

SEB MERCHANT BANKING – COUNTRY RISK ANALYSIS February 18, 2009

Analyst: Rolf Danielsen. Tel : +46 8 763 83 92. E-mail : rolf.danielsen@seb.se

Years of overheating driven by rapid credit growth and procyclical fiscal policies reached the tipping
point last fall and Romania risks a near term hard landing.

Country Risk Analysis

=
^ÑíÉê=óÉ~êë=çÑ=ëíÉää~ê=éÉêÑçêã~åÅÉ=íÜÉ=ÉÅçåçãó=ëäçïë=~ÄêìéíäóK==få=OMMUI=ÖêçïíÜ=
~ÅÅÉäÉê~íÉÇ=íç=UIQB=~ë=~ÖêáÅìäíìêÉ=êÉÅçîÉêÉÇ=Ñêçã=ÇêçìÖÜí=íÜÉ=éêÉÅÉÇáåÖ=óÉ~êI=~åÇ=
íÜÉ=ÇçãÉëíáÅ=ÇÉã~åÇ=Äççã=ÅçåíáåìÉÇ=áåíç=íÜÉ=åÉï=óÉ~ê=ÄìçóÉÇ=Äó=ëíêçåÖ=Éñéçêíë=
~åÇ=ÄìääáëÜ=ëÉåíáãÉåí=~ãçåÖ=áåîÉëíçêë=~åÇ=ÅçåëìãÉêëK=oÉ~ä=Éëí~íÉ=ÅçåëíêìÅíáçå=
ëíÉ~ãÉÇ=Ñçêï~êÇ=éçïÉêÉÇ=Äó=ÖÉåÉêçìë=ÅêÉÇáíë=Ñêçã=Ä~åâë=é~êíáÅìä~êäó=áå=ÑçêÉáÖå=
ÅìêêÉåÅáÉë=áåÅäìÇáåÖ=íç=ÜçìëÉÜçäÇëK==^ë=~=êÉëìäí=íÜÉ=ÉÅçåçãó=ïÉåí=áåíç=çîÉê=ÖÉ~êI=
ÅêÉ~íáåÖ=éêÉëëìêÉë=áå=éêçÇìÅí=~åÇ=ä~Äçê=ã~êâÉíëK==qÜÉ=ä~ííÉê=Ü~Ç=~äêÉ~Çó=íáÖÜíÉåÉÇ=
ÅçåëáÇÉê~Ääó=ÇìÉ=íç=ÉãáÖê~íáçå=çÑ=àçÄJëÉÉâÉêë=íç=fí~äó=~åÇ=pé~áåK=`çãÄáåÉÇ=ïáíÜ=
äçåÖJëí~åÇáåÖ=ëíêìÅíìê~ä=
áåÑäÉñáÄáäáíáÉë=ä~Äçê=ëÜçêí~ÖÉ= Bank loans to households
(long and medium term)
ÄÉÅ~ãÉ=~ÅìíÉ=~åÇ=ëÉåí=ï~ÖÉ=
60
ÇÉã~åÇë=ëç~êáåÖK===oáëáåÖ=
ÇçãÉëíáÅ=éêáÅÉ=éêÉëëìêÉë= 50

ÑçääçïÉÇ=~åÇ=ÅçãÄáåÉÇ=ïáíÜ= euro etc

RON (billions)

40
ÜáÖÜ=áåíÉêå~íáçå~ä=ÑìÉä=~åÇ=ÑççÇ=
éêáÅÉë=íç=ÇêáîÉ=áåÑä~íáçå=áåíç= 30

ÇçìÄäÉ=ÇáÖáí=íÉêêáíçêó=Ñçê=ëÉîÉê~ä= 20
ãçåíÜëK==Ó=qÜáë=Å~ãÉ=íç=~= Leu
10
ëìÇÇÉå=Ü~äí=áå=íÜÉ=Ñ~ää=~ë=êáëâ=
~ééÉíáíÉ=çÑ=áåíÉêå~íáçå~ä= 0
2005 2006 2007 2008
áåîÉëíçêë=éäìããÉíÉÇ=~åÇ=
áåíÉêå~íáçå~ä=äáèìáÇáíó=~ää=Äìí= Foreign exchange, long term, households [ + Foreign exchange, medium term, households]
Lei, long term, households [ + Foreign exchange, medium term, households]
Source: Reuters EcoWin

ÇêáÉÇ=ìéK=f=å=oçã~åá~I=Ä~åâë=
~äãçëí=ÑêçòÉ=åÉï=ÅêÉÇáíë=áå=íÜÉ=ä~ëí=ÑÉï=ãçåíÜë=çÑ=íÜÉ=óÉ~êI=ê~éáÇäó=ÅççäáåÖ=~Åíáîáíó=
áå=íÜÉ=ÜçìëáåÖ=ã~êâÉí=~åÇ=ëÜ~êéäó=êÉÇìÅáåÖ=áãéçêí=ÖêçïíÜK==qÜ~í=éêÉîÉåíÉÇ=íÜÉ=
íê~ÇÉ=ÇÉÑáÅáí=ÖêçïáåÖ=çìí=çÑ=ÅçåíêçäI=äÉ~îáåÖ=áí=~í=íÜÉ=ë~ãÉ=äÉîÉä=êÉä~íáîÉ=íç=dam=~ë=áå=
OMMTI=ïÜáÅÜI=ÜçïÉîÉêI=ëíáää=ãÉ~åí=~=ÜÉÑíó=NQBLdamK==tÜáäÉ=ÇÉÑáÅáíë=áå=éêÉîáçìë=óÉ~êë=
ìëÉÇ=íç=ÄÉ=~äãçëí=Ñìääó=ÅçîÉêÉÇ=Äó=ÑçêÉáÖå=ÇáêÉÅí=áåîÉëíãÉåíë=EcafFI=íÜ~í=ëÜ~êÉ=ï~ë=
Ççïå=íç=çåäó=Ü~äÑ=áå=OMMUK==
=
qÜÉ=ÑáëÅ~ä=ÇÉÑáÅáí=ÄÉÅçãÉë=~=ÅçåÅÉêåK==cçê=ëÉîÉê~ä=óÉ~êë=oçã~åá~=éêáÇÉÇ=áíëÉäÑ=çÑ=
éêìÇÉåí=ã~Åêç=ÉÅçåçãáÅ=éçäáÅáÉë=íÜ~í=Ü~Ç=É~êåÉÇ=íÜÉ=Åçìåíêó=~å=áåîÉëíãÉåí=Öê~ÇÉ=
ê~íáåÖ=ïáíÜ=áåíÉêå~íáçå~ä=ê~íáåÖ=~ÖÉåÅáÉëK=qÜÉ=ÑáëÅ~ä=ÇÉÑáÅáí=Ü~Ç=ÄÉÉå=Åçåí~áåÉÇ=ïÉää=
ïáíÜáå=j~~ëíêáÅÜí=ÅêáíÉêá~I=~äíÜçìÖÜ=ëíêçåÖ=ÖêçïíÜ=Ü~Ç=Ñ~Åáäáí~íÉÇ=íÜ~í=êÉëìäíK==_ìí=

important your attention is drawn to the statement on the back cover of this report which affects your rights.
SEB Merchant Banking Country Risk Analysis June 21, 2008

OMMU=ÄÉáåÖ=~å=ÉäÉÅíáçå=óÉ~êI=éçäáíáÅá~åë=ïÉåí=çìí=çÑ=íÜÉáê=ï~ó=áå=éêçãáëáåÖ=ÖÉåÉêçìë=
ï~ÖÉ=ÜáâÉë=Ñçê=éìÄäáÅ=ëÉÅíçê=ÉãéäçóÉÉë=~åÇ=~=ÖÉåÉêçìë=Äççëí=íç=éÉåëáçåëK==qÜáë=åçí=
çåäó=ÑìÉääÉÇ=ï~ÖÉ=áåÑä~íáçå=áå=íÜÉ=ÉÅçåçãó=~í=ä~êÖÉI=Äìí=ÅçãÄáåÉÇ=ïáíÜ=çíÜÉê=
çîÉêëéÉåÇáåÖ=~åÇ=í~ñ=êÉÇìÅíáçåë=áåÅäìÇáåÖ=çÑ=s^q=çå=ÑççÇ=áíÉãë=íç=ëÉåÇ=íÜÉ=ÑáëÅ~ä=
ÇÉÑáÅáí=çåíç=~=êáëáåÖ=íê~àÉÅíçêóK==^í=íÜÉ=íáãÉ=çÑ=íÜÉ=ÖÉåÉê~ä=ÉäÉÅíáçåë=áå=kçîÉãÄÉêI=íÜÉ=
ÇÉÑáÅáí=ï~ë=~ÅÅÉäÉê~íáåÖ=ê~éáÇäó=êÉÑäÉÅíáåÖ=íÜÉ=ìåÉñéÉÅíÉÇ=Ñêçåíäç~ÇáåÖ=çÑ=éÉåëáçå=
áåÅêÉ~ëÉë=Äó=íÜÉ=çìíÖçáåÖ=ÖçîÉêåãÉåíK====få=íÜÉ=ÉîÉåíI=íÜÉ=ÄìÇÖÉí=ÉåÇÉÇ=áå=~=ÇÉÑáÅáí=
çÑ=ãçêÉ=íÜ~å=RB=çÑ=damI=ãçêÉ=íÜ~å=íïáÅÉ=~ë=ãìÅÜ=~ë=íÜÉ=éêÉîáçìë=óÉ~ê=~åÇ=ãçêÉ=
íÜ~å=íïáÅÉ=~ë=ãìÅÜ=~ë=éä~ååÉÇ=~í=íÜÉ=ÄÉÖáååáåÖ=çÑ=íÜÉ=ÅìêêÉåí=óÉ~êK===
=
táää=íÜÉ=åÉï=ÖçîÉêåãÉåí=íìêå=íÜÉ=íáÇÉ\==qç=ëíÉã=íÜÉ=çåÖçáåÖ=ÇÉíÉêáçê~íáçå=íç=íÜÉ=
ÑáëÅ~ä=éçëáíáçåI=íÜÉ=çìíÖçáåÖ=~Çãáåáëíê~íáçå=Ü~Ç=éìí=íÜÉ=áãéäÉãÉåí~íáçå=çÑ=íÜÉ=
éêÉîáçìë=é~êäá~ãÉåí=ÇÉÅáëáçå=íç=ÜáâÉ=íÉ~ÅÜÉêëÛ=ë~ä~êáÉë=Äó=RMB=~ë=çÑ=g~åì~êó=OMMV=çå=
ÜçäÇ=ÄÉÑçêÉ=áí=äÉÑí=çÑÑáÅÉK==eçïÉîÉêI=ÇÉëéáíÉ=íÜ~í=ÉåÅçìê~ÖáåÖ=ëáÖå=çÑ=êÉåÉïÉÇ=ÑáëÅ~ä=
éêìÇÉåÅÉI=ã~åó=çÄëÉêîÉêë=ÇçìÄí=íÜÉ=áåÅçãáåÖ=ÖçîÉêåãÉåí=ïáää=Ü~îÉ=åÉáíÜÉê=íÜÉ=
~Äáäáíó=åçê=íÜÉ=éÉêëÉîÉê~åÅÉ=íç=Å~êêó=íÜêçìÖÜ=~åó=ëáÖåáÑáÅ~åí=ÑáëÅ~ä=êÉëíê~áåí=áå=OMMVI=
~åÇ=íÜ~í=íÜÉ=ÄìÇÖÉí=áå=íÜÉ=ÄÉëí=çÑ=Å~ëÉë=ïáää=ÉåÇ=áå=~=åÉï=ÇÉÑáÅáí=áå=äáåÉ=ïáíÜ=íÜÉ=
êÉëìäí=çÑ=OMMUK==oÉÅÉåí=Ç~í~=áåÇáÅ~íÉ=éäìåÖáåÖ=í~ñ=êÉîÉåìÉë=ïÜáäÉ=ãçëí=ëéÉåÇáåÖ=
ÅçããáíãÉåíë=ÅçåíáåìÉK=få=~ÇÇáíáçåI=íÜÉ=åÉï=éçäáíáÅ~ä=ëáíì~íáçå=áë=ÅçãéäáÅ~íÉÇ=~åÇ=
Ü~ë=åçí=Ä~ëáÅ~ääó=ÅÜ~åÖÉÇ=íÜÉ=éçäáíáÅ~ä=ëí~äÉã~íÉ=Å~ìëÉÇ=Äó=~=Ñê~ÖãÉåíÉÇ=éçäáíáÅ~ä=
ä~åÇëÅ~éÉK==qÜÉ=kçîÉãÄÉê=OMMU=ÉäÉÅíáçå=êÉëìäíÉÇ=áå=~=îáêíì~ä=Çê~ï=ÄÉíïÉÉå=íÜÉ=
~ääá~åÅÉ=çÑ=íÜÉ=ëçÅá~ä=ÇÉãçÅê~íë=EpmaF=ïáíÜ=íÜÉ=ÅçåëÉêî~íáîÉë=E`mF=~åÇ=íÜÉ=
ÇÉãçÅê~íáÅ=äáÄÉê~äë=EaimF=ÄçíÜ=çÑ=ïÜáÅÜ=ïçå=PPB=çÑ=íÜÉ=îçíÉëK=qÜÉ=íïç=ïáååÉêë=
ÑçêãÉÇ=~=Åç~äáíáçå=ÖçîÉêåãÉåí=ïáíÜ=~=ÅçãÑçêí~ÄäÉ=ã~àçêáíó=áå=é~êäá~ãÉåíK=tÜáäÉ=íÜ~í=
ã~ó=ëçìåÇ=éêçãáëáåÖI=íÜÉ=
ìåÇÉêäóáåÖ=íÉåëáçåë=~ãçåÖ=íÜÉëÉ=
ìåäáâÉäó=ÄÉÇJã~íÉë=~êÉ=é~äé~ÄäÉI=~ë= Romania has made significant
ëÉÉå=áå=íÜÉ=ÉñÅÜ~åÖÉ=çÑ=ëÉêáçìë= strides in catching up with EU
Åçêêìéíáçå=ÅÜ~êÖÉëK==mêÉëëìêÉë=~êÉ= income levels, but fast real
ãçìåíáåÖ=Ñçê=íÜÉ=áãéäÉãÉåí~íáçå=çÑ= convergence has gone hand in
íÜÉ=éçëíéçåÉÇ=ï~ÖÉ=ÜáâÉë=Ñçê= hand with growing macro
íÉ~ÅÜÉêëI=ïÜáÅÜ=áå=íìêå=ïáää=íêáÖÖÉê= economic imbalances. Once EU
ÇÉã~åÇë=Ñçê=ëáãáä~ê=ê~áëÉë=Ñçê=çíÜÉê= accession prospects looked
Öêçìéë=çÑ=éìÄäáÅ=ÉãéäçóÉÉëK== secure, foreign capital flooded
= into Romania to take advantage
táää=ãçåÉí~êó=ÅçãÉ=íç=íÜÉ=êÉëÅìÉ\= of perceived improvements in
få=OMMRI=íÜÉ=ÅÉåíê~ä=Ä~åâ=~ÇçéíÉÇ=~å= investments risk and returns,
áåÑä~íáçå=í~êÖÉíáåÖ=ãçåÉí~êó=éçäáÅóK== triggering an absorption boom.
aÉëéáíÉ=íÜÉ=éÉ~âáåÖ=çÑ=áåÑä~íáçå=áå= (IMF 2008)
OMMU=~í=UIQB=~ë=~îÉê~ÖÉ=Ñçê=íÜÉ=óÉ~êI=
íÜÉ=ÖÉåÉê~ä=àìÇÖãÉåí=áë=íÜ~í=íÜÉ=ÅÉåíê~ä=Ä~åâ=Ü~ë=éìêëìÉÇ=íÜáë=éçäáÅó=ïáíÜ=ëçãÉ=
ëìÅÅÉëë=ÖáîÉå=íÜÉ=ÇáÑÑáÅìäí=ÉåîáêçåãÉåí=çÑ=~=éêçJÅóÅäáÅ~ä=ÑáëÅ~ä=ëí~åÅÉK==tÜÉå=íÜÉ=
~ééêÉÅá~íáçå=íáÇÉ=íìêåÉÇ=áå=ãáÇJOMMUI=íÜÉ=ÅÉåíê~ä=Ä~åâ=ÄÉÖ~å=íç=ÜáâÉ=ê~íÉë=íç=ëçÑíÉå=
íÜÉ=Ñ~ää=çÑ=íÜÉ=ÉñÅÜ~åÖÉ=ê~íÉK==eçïÉîÉêI=~ë=íÜ~í=éêçîÉÇ=áåëìÑÑáÅáÉåí=áå=nQI=áí=~äëç=
áåíÉêîÉåÉÇ=Ñçê=ëçãÉ=AQ=ÄáääK=áå=íÜÉ=ÑçêÉñ=ã~êâÉíI=ÇÉéäÉíáåÖ=êÉëÉêîÉë=Äó=~=íÉåíÜ=íç=APQ=
ÄáääKK==qÜÉó=~êÉ=ëíáää=èìáíÉ=~ÇÉèì~íÉ=áå=íÉêãë=çÑ=R=ãçåíÜë=áãéçêí=ÅçîÉê~ÖÉI=Äìí=
Çï~êÑÉÇ=Äó=ANT=ÄáääK=~ãçêíáò~íáçå=~åÇ=ëçãÉ=APM=ÄáääK=ëÜçêíJíÉêã=äç~åë=Ñ~ääáåÖ=ÇìÉ=
çîÉê=íÜÉ=åÉñí=NO=ãçåíÜëK==
=
oáëáåÖ=êáëâ=çÑ=ëíê~áåÉÇ=äáèìáÇáíóK==qÜ~í=ïçìäÇ=åçí=ÄÉ=çÑ=ãìÅÜ=ÅçåÅÉêå=ìåÇÉê=åçêã~ä=
ÅáêÅìãëí~åÅÉëI=Äìí=íÜÉ=êáëâ=éçáåíÉÇ=çìí=Äó=áåÅêÉ~ëáåÖ=åìãÄÉêë=çÑ=çÄëÉêîÉêë=áë=çÑ=
ÑìêíÜÉê=ÖäçÄ~ä=ÅêÉÇáí=ÅêìåÅÜ=~åÇ=äáèìáÇáíó=ëèìÉÉòÉK==qÜ~í=êáëâ=áë=~ÅÅÉåíì~íÉÇ=Äó=íÜÉ=
Ç~åÖÉê=íÜ~í=ëçãÉ=ÑçêÉáÖå=é~êÉåí=Ä~åâë=ëóëíÉã=ÅçìäÇ=ïáíÜÇê~ïI=~ÑíÉê=Ü~îáåÖ=

2
SEB Merchant Banking Country Risk Analysis June 21, 2008

Ñáå~åÅÉÇ=ãçêÉ=íÜ~å=~=íÜáêÇ=çÑ=íÜÉ=êÉÅÉåí=ÅêÉÇáí=ÄççãK==kçíáåÖ=íÜ~í=ÑçêÉáÖå=Ä~åâë=
Åçåíêçä=VMB=çÑ=íÜÉ=ÇçãÉëíáÅ=Ä~åâáåÖ=ëóëíÉãI=íÜÉ=êÉëìäí=ÅçìäÇ=ÄÉ=~=ÖÉåÉê~ä=ÇÉÑ~ìäí=
ëáíì~íáçå=ÄÉÑçêÉ=äçåÖ=ÉîÉå=íÜçìÖÜ=oçã~åá~=áë=ãçêÉ=ëçäîÉåí=íÜ~å=ã~åó=éÉÉêëK=
bñíÉêå~ä=ÇÉÄí=ëí~åÇë=~í=~Äçìí=RMB=çÑ=damI=äÉëë=íÜ~å=Ü~äÑ=íÜÉ=äÉîÉä=çÑ=íÜÉ=_~äíáÅ=
ÅçìåíêáÉëK==lìí=çÑ=íÜ~í=ÇÉÄí=íÜÉ=ÖçîÉêåãÉåí=Åçìåíë=Ñçê=çåäó=~=ãáåçê=é~êíI=äáâÉ=áå=íÜÉ=
_~äíáÅëK==tÜáäÉ=íÜáë=ëÜçìäÇ=ãáíáÖ~íÉ=íÜÉ=êáëâ=çÑ=~å=çìíêáÖÜí=ëçîÉêÉáÖå=ÇÉÑ~ìäí=áå=íÜÉ=
åÉ~ê=íÉêãI==Åçãé~åáÉë=~åÇ=ÜçìëÉÜçäÇëI=~êÉ=ëççå=äáâÉäó=íç=ÄÉÅçãÉ=Ñáå~åÅá~ääó=
îìäåÉê~ÄäÉK=qÜ~í=áë=åçí=çåäó=ÄÉÅ~ìëÉ=çÑ=ïÉ~â=áåÅçãÉ=éêçëéÉÅíë=~ë=ÉÅçåçãáÅ=~Åíáîáíó=
ÇÉÅÉäÉê~íÉë=ëÜ~êéäó=íç=äÉëë=íÜ~å=NB=ÖêçïíÜ=áå=OMMV=~åÇ=éÉêÜ~éë=OMNMI=Äìí=~äëç=
ÄÉÅ~ìëÉ=çÑ=íÜÉ=ëíÉÉé=ÇÉéêÉÅá~íáçå=çÑ=íÜÉ=ÉñÅÜ~åÖÉ=ê~íÉI=ÜìêíáåÖ=Åçãé~åáÉë=~åÇ=
ÜçìëÉÜçäÇë=ïáíÜ=ÇÉÄí=áå=Éìêçë=~åÇ=pïáëë=cê~åÅI=êÉéêÉëÉåíáåÖ=RSB=çÑ=~ää=Ä~åâ=äç~åë=íç=
íÜÉ=éêáî~íÉ=ëÉÅíçêK===
=
JJGJJ=
=
fåîÉëíçê=îáÉï=çå=oçã~åá~=Ü~ë=ÅÜ~åÖÉÇ=ëÜ~êéäó=íç=ÄÉ~êáëÜ=ãççÇ=áå=êÉÅÉåí=íáãÉë=
Ñêçã=ÉÄìääáÉåí=çéíáãáëã=çåäó=~=óÉ~ê=~ÖçK==qÜÉ=ê~íáåÖ=~ÖÉåÅáÉë=Ü~îÉ=ÇçïåÖê~ÇÉÇ=íÜÉ=
Åçìåíêó=Äó=ëÉîÉê~ä=åçíÅÜÉë=Ñêçã=ÇÉÅÉåí=áåîÉëíãÉåí=Öê~ÇÉë=áåíç=ëéÉÅìä~íáîÉ=Öê~ÇÉëK==
táíÜ=íÜÉ=çåÖçáåÖ=ÇáÑÑáÅìäí=áåíÉêå~íáçå~ä=äáèìáÇáíó=~åÇ=ÅêÉÇáí=ëáíì~íáçå=oçã~åá~=
ÅçìäÇ=ëççå=ÄÉ=Üáí=Äó=ëÉîÉêÉ=Å~éáí~ä=ÑäáÖÜí=~åÇ=áå~Äáäáíó=íç=êçää=çîÉê=ÑçêÉáÖå=Ñáå~åÅáåÖ=
~í=êÉ~ëçå~ÄäÉ=ê~íÉëK==tÜáäÉ=êÉëÉêîÉë=ëÜçìäÇ=ëìÑÑáÅÉ=íç=ÅçîÉê=êÉä~íáîÉäó=ãçÇÉëí=
ÖçîÉêåãÉåí=ÑçêÉáÖå=ÇÉÄí=ëÉêîáÅÉ=~åÇ=~=ê~éáÇäó=ëÜêáåâáåÖ=íê~ÇÉ=ÇÉÑáÅáí=áå=OMMVI=íÜÉ=
çåìë=ïáää=ÄÉ=çå=íÜÉ=éêáî~íÉ=ëÉÅíçê=íç=ãÉÉí=áíë=çÄäáÖ~íáçåë=áå=~å=ÉåîáêçåãÉåí=çÑ=
ëÜ~êéäó=Ñ~ääáåÖ=ÉÅçåçãáÅ=~Åíáîáíó=~åÇ=~=éêçÄ~Ääó=ïÉ~âÉåáåÖ=ÉñÅÜ~åÖÉ=ê~íÉK=tÉ=
ÄÉäáÉîÉ=íÜ~í=áåÅêÉ~ëÉë=íÜÉ=ÖÉåÉê~ä=Åçìåíêó=êáëâ=ãçêÉ=ëíÉÉéäó=íÜ~å=íÜÉ=ëçîÉêÉáÖå=êáëâK==
=

Key ratios 2009 Resilience

12

mçéìä~íáçå=EãáääáçåëF ON 10

GDP/capita ($) 7201 6

Macro balance 4
Liquidity
GDP (change) 0,6% 2

Inflation 4,1%
Curr.acc. balance/GDP -12%
Absence of
Reserves/imports (months) 4,4 Information
event risk
Budget balance/GDP(*) -5,2%
Romania Ukraine
Government debt/GDP(*) 14%
Graph: The graph shows Romania as relatively strong on
bñíÉêå~ä=ê~íáåÖëW= mÉÉêëW resilience -- i.e. good long term factors, compared with
cáíÅÜW=__HLkbd râê~áåÉ
many peers, while weakness is on the macro balance.
pCmW=__HLkbd i~íîá~
Event risk is high but milder than in Ukraine.
oìëëá~=
=

i~íÉëíW=oçã~åá~=~ëâë=Ñçê=fjc=ëìééçêí=
==få=ä~íÉ=cÉÄêì~êó=íÜÉ=ÖçîÉêåãÉåí=çéÉåÉÇ=ÇáëÅìëëáçåë=ïáíÜ=íÜÉ=fjc=Ñçê=~=éçëëáÄäÉ=fjc=
éêçÖê~ã=~åÇ=ÅêÉÇáí=Ñ~Åáäáíó=ïáíÜ=íÜÉ=~áã=íç=ÜÉäé=íÜÉ=Åçìåíêó=ãÉÉí=~å=çåÉêçìë=åÉ~ê=íÉêã=
ÇÉÄí=ëÉêîáÅÉK==pìÅÜ=~=éêçÖê~ã=áë=äáâÉäó=íç=éìí=~=íáÖÜí=äáÇ=çå=ÑáëÅ~ä=ÉñéÉåÇáíìêÉë=~åÇ=äáãáí=~åó=
ë~ä~êó=áåÅêÉ~ëÉë=áå=OMMVK==qÜ~í=ëÜçìäÇ=ÜÉäé=ÄçäëíÉê=áåîÉëíçê=ëÉåíáãÉåíI=É~ëáåÖ=íÜÉ=êÉÑáå~åÅáåÖ=
çÑ=oçã~åá~Ûë=ÑçêÉáÖå=ÇÉÄí=~åÇ=íÜÉ=Ñáå~åÅáåÖ=çÑ=íÜÉ=ÅçåíáåìÉÇ=ÉñíÉêå~ä=ÅìêêÉåí=~ÅÅçìåí=
ÇÉÑáÅáíK=qÜáë=áë=~=éçëáíáîÉ=ÇÉîÉäçéãÉåíI=Äìí=ÇçÉë=åçí=ÅÜ~åÖÉ=çìê=çîÉê~ää=êáëâ=~ëëÉëëãÉåí=
ÄÉÑçêÉ=ïÉ=ëÉÉ=íÜÉ=Åçìåíêó=~ÄäÉ=íç=Å~êêó=~å=fjcJäÉÇ=~ìëíÉêáíó=éêçÖê~ã=íç=áíë=ëìÅÅÉëëÑìä=
ÅçåÅäìëáçåK==

3
SEB Merchant Banking Country Risk Analysis June 21, 2008

Key data: 2004 2005 2006 2007 2008 2009 2010 2011
GDP (mill. US$) 75954 98397 123679 167423 193400 153016 179852 207617
GDP/capita (US$) 3496 4550 5744 7810 9061 7201 8505 9867
GDP (change) 8,4% 4,2% 7,9% 6,0% 8,0% 0,6% 0,8% 2,3%
Investments/GDP 21% 23% 26% 31% 35% 35% 38% 41%
Budget balance/GDP* -1,5% -0,8% -1,5% -2,3% -5,1% -5,2% -4,8% -4,2%
Govt debt/GDP** 19% 16% 13% 13% 13% 14% 13% 15%
CPI inflation (%) 11,9% 9,0% 6,6% 4,8% 7,8% 4,1% 3,0% 3,6%
Money demand (%) 34,8% 40,2% 26,7% 28,6% 30,5% 8,5% 10,5% 10,5%
Stock prices 2094 3514 4676 6296 4041
Interest rates 20,3% 9,6% 8,4% 7,5% 9,5% 8,0% 5,6% 5,3%
Exch. Rate ($) 3,26 2,91 2,81 2,44 2,52 3,37 3,22 3,22
Trade/GDP (%) 71% 66% 65% 63% 69% 86% 79% 76%
Oil price (Brent) $38 $54 $65 $73 $98 $45 $60 $74
Millions US $
Export of goods 23 551 27 647 32 485 40 315 51 999 55 332 61 757 68 860
Imports of goods 30 213 37 252 47 368 64 542 81 073 76 363 81 211 89 949
Other: 288 1 107 2 027 922 1 724 1 981 1 666 2 050
Current account -6 374 -8 498 -12 856 -23 305 -27 350 -19 050 -17 788 -19 038
(% of GDP) -8,4% -8,6% -10,4% -13,9% -14,1% -12,4% -9,9% -9,2%
FDI 6 362 6 464 11 009 9 664 13 939 6 660 6 398 6 126
Loan repayments -8 991 -11 839 -16 367 -22 125 -25 893 -28 797 -31 731 -34 665
Net other capital flows 12 955 20 915 24 353 44 362 44 246 33 035 47 738 54 444
Balance of payments 3 952 7 042 6 140 8 596 4 943 -8 152 4 617 6 867
Reserves NN=MPV NU=MUN OQ=OON PO=UNT PT=TRV OV=SMT PQ=OOQ QN=MVM
Total debt 26 972 35 516 49 100 66 375 77 678 86 390 95 192 103 994
o/w short term debt 3 680 6 413 13 939 24 980 32 825 34 025 35 851 37 412
Sources: Oxford Economics and SEB estimates.

Rating history

Fitch (eoy) BBB- BBB- BBB BBB BB+

S&P (eoy) BB+ BBB- BBB- BBB- BB+
Type of government: Parliamentary Democracy
Next elections 2012
Other:
Latest PC deal NA
SBA 2004
Latest IMF arrangements

Stock exchange Romania, Spot Rates, Close

4,5 EUR/RON
USD/RON
4,2885
3,334
10000 4,0
8000 3,5
x 3,0
e 6000
d 2,5
n
I 4000 2,0
1,5
2000 1,0
0,5
0
2000 2004 2008 0,0 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

EUR/RON USD/RON
Source: Reuters EcoWin Source: Reuters EcoWin

Interbank rates Consumer Prices

55 300

50 275
45
250
40
.a 225
35 p
.a t
p n
% 30 e 200
c
25 er
P
175
20
150
15
10 125

5 100
2008 2009 1996 1998 2000 2002 2004 2006 2008
Source: Reuters EcoWin Source: Reuters EcoWin

4
SEB Merchant Banking Country Risk Analysis June 21, 2008

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