The report covers info as of June 24.

Romania’s president, Klaus Iohannis, has appointed Gabriel Oprea – currently minister of interior and deputy prime minister – for the position of interim prime minister while Prime Minister Victor Ponta is on medical leave. Ponta extended its medical leave from June 16-19 to three to four weeks but he later decided to return as soon as possible after internal tensions occurred within the ruling coalition.
The political volatility might result in the country abandoning de facto de SBA with the IMF and the BoP assistance programme with the EC – due for completion in September.

Romania’s parliament endorsed on June 24 the revised Fiscal Code – including the controversial lowering of the VAT rate from 24% to 19% and other tax rate cuts. As an effect, the fiscal deficit will widen next year to 2.9% of GDP, said Finance Minister Eugen Teodorovici. But he stressed that the gap would remain below the 3%-of-GDP benchmark and the country would thus avoid the excessive deficit procedures.

Key Points
• Parliament endorses Fiscal Code, including 19% VAT rate [VAT rate for foodstuff was cut to 9% as of June 1, 2014]
• European Commission, IMF concerned about 5pp cut of VAT rate
• IMF mission expected in Romania in mid-Jul
• General government surplus stands at 0.85% of GDP in Jan-Apr
• Strong private consumption and investments contributed to robust 4.3% y/y Q1 GDP growth
• State forecasting body revises 2015 GDP growth up 0.5pp to 3.3%; World Bank revises projection on Romania’s 2015 GDP growth to 3%
• Electricity consumption 3.9% down y/y in Jan-Apr
• Retail sales growth accelerates to 7.1% y/y in April
• Net wages 6.3% up y/y in April
• Treasury relies on short-term financing as cost of longer-term bonds rise
• Romania is ready to launch €1-1.5bn Eurobond, considers two issues this year
• Romania’s public debt up 4.5% y/y, debt-to-GDP ratio stays at 38.4% at end-March
• Romania's banking system reports robust €187mn profits in Q1
• Banks' NPL ratio drops 0.3pp m/m and 7pp y/y, to 13.5% at end-April
• New bank loans issued in Romania up 5.7% y/y, to €3.45bn in Jan-Apr
• Romania’s C/A deficit narrows by 92% y/y to a mere €27mn in Jan-Apr