According to Valahia News, personal remittances from Romanians working abroad exceed direct investments in the country. This is the first instance of this happening. Romanians who work in foreign countries are the largest foreign investors in the country, but this is not good news at all.
This shows that investors have lost faith in the Romanian economy. Romania is currently borrowing at the highest rate of the European Union which is 5.37%. Romanian borrowings were at this high-level last year when the interest rate was 5.433%. Germany, for comparison, borrows money at negative interest.
With energy prices rising rapidly, inflation is on the rise and has already reached 7.80% as of November.
According to the former Romanian Prime Minister,Mr. Florin Citu, Romania may be required to request an emergency loan from international financial institutions:
“There is one more thing, of vital importance. The confidence of the investors in Romania’s Government. Without their confidence, in the current global context, Romania could be forced to ask for an emergency loan from international institutions.”
Florin Citu warned the country’s new leaders about two options for resolving the situation, both of which fall under the purview of the National Bank of Romania: weakening the local currency or increasing the monetary policy rate even further.
In any case, it means hard times for the typical Romanian worker. Meanwhile, these harsh policies may be able to give a needed boost to the Romanian economy.
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