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UPDATE 1 - Romania's fin min tells S&P 'greed tax' on banks under revision

UPDATE 1 - Romania's fin min tells S&P 'greed tax' on banks under revision Finance ministry, Romania

BUCHAREST (Romania), March 4 (SeeNews) - Romania's finance ministry is revising a controversial tax on banks, the so-called 'greed tax', it told global ratings agency Standard & Poor's Global Ratings in a letter published on Monday.

The finance ministry is planning to replace the tax on bank assets, which is calculated on the basis of the three-month and six-month Romanian Interbank Offered Rate (ROBOR), with an annual fixed fee applicable to only certain asset categories, the letter, posted on social media by an MP of the opposition Save Romania Union party, showed.

Furthermore, the tax will be adjusted downwards, taking into account margins resulting from the difference between interest rate on attracted deposits and on loans granted in lei, the document showed.

The controversial government decree issued in late December also obliges domestic natural gas producers to sell their output mainly to suppliers at regulated prices, enforces new taxes for energy companies and establishes new rules for the operation of private pension funds. The fiscal overhaul was widely criticised by industries, European Central Bank, European Commission, opposition parties and by president Iohannis.

On Saturday morning, the prime minister's economic advisor Darius Valcov told local TV station Antena 3 that together with the finance minister they had sent a letter to S&P asking it not to change Romania's outlook to negative yet, as the country needs some more time to approve the 2019 budget and assess the effects of a planned tax reform.

For its part, S&P Global Ratings said it has accepted Romania's request for an appeal of its credit rating outlook, while affirming its rating at BBB-/A-3.

"As a consequence, we will deviate from our calendar of 2019 EMEA sovereign, regional, and local government rating publication dates to resolve the appeal. We plan to resolve it within two weeks," S&P Global said in a press release.

The ratings on Romania continue to be supported by its moderate external private and public debt levels, and still sound growth prospects, S&P noted.

"In our opinion, Romania's institutional effectiveness remains weak, however, which constrains the ratings," it added.

While Romania continues to benefit from solid fiscal and external stock positions, S&P thinks that notably widening fiscal and external deficits could over time eat into these buffers and make the Romanian economy increasingly vulnerable to slowing growth momentum, the agency also said.

(1 euro=4.7397 euro)

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