November 8 (SeeNews) - The Romanian leu on Wednesday weakened the most against the euro since July 2012, as the left-wing government approved controversial fiscal changes widely criticized by the businesses.
The central bank, BNR, set its reference exchange rate at 4.6198 lei per euro on Wednesday, 0.50% weaker than 4.5961 lei per euro on Tuesday and the lowest exchange rate for the Romanian currency since July 2012, when it stood at 4.6374 lei per euro.
On Wednesday morning, the leu changed hands between 4.6195 and 4.6345 per euro, according to real-time interbank forex trading data published by local portal Conso.ro.
On Wednesday, Romania's governing coalition comprising the Social Democratic Party (PSD) and centre-right Liberal-Democrat Alliance (ALDE) approved an emergency decree to amend the country's fiscal code. The project introduces tax and income changes starting January 2018 which have drawn fire from the businesses.
Starting January 2018, workers will pay the social security contributions currently paid by employers, while the income tax rate will drop from 16% to 10%.
On November 2, Romania's president Klaus Iohannis asked the governing coalition to abandon the planned tax changes which in his opinion could lead to fiscal turmoil.
"The government wants to shift social contributions from the employer to the employee and to cut income tax. At first glance, these changes seem interesting, but a deeper analysis shows that they increase problems rather than solving them," the president said in a televised statement.
Iohannis also noted that Romania's robust economic growth this year is good news, but it is not stable as it is based on consumption and not on investments.
In 2016, Romania's economy grew by 4.8% year-on-year, compared to a revised growth rate of 3.9% in 2015.
The government expects Romania's economy to expand by 6.1% in 2017.
(1 euro=4.6198 lei)