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Finance minister stopped borrowing money from the market. Teodorovici: We have funding resources for minimum six months

de Adrian N Ionescu , 4.2.2019

Minister of Public Finance (MFP), Eugen Orlando Teodorovici, has ordered to stop borrowing operations on the market because MFF would have all the money needed in the treasury to ensure financing on at least six months.

“Yesterday (Monday, editor’s note) I instructed and said: we do not borrow in the market. Since I have heard here “I do not know what shame”. No, once again: The Ministry of Finance has enough money to finance itself. You know very well – we have the amounts in the treasury needed to finance ourselves, (…) for a very long time, minimum six months,” said Orlando Teodorovici, quoted by Agerpres.

The statement comes after a series of three government bond auctions in which the MFP failed to borrow from banks more than one third of the amounts demanded.

On Monday, the MFP rejected all the bids received from banks for a 150-month government bond issue, which was intended to attract RON400 million.

Banks participating in the auction submitted bids totalling only RON 123.2 million.

The official added that the Ministry of Finance cannot buy at a “higher” price than it is necessary.

“We cannot buy at a price that someone in the market is trying to move higher than it is necessary or it should be. And then the decision of the Finance Ministry is to not borrow, and that was the decision yesterday,” Orlando Teodorovici said.

Reaction to OUG 114

The Finance Minister avoided considering banks’ behaviour as a reaction to OUG 114 and invoked the position of the banking system and the BNR, which wants the discussions to take place in the National Macro-prudential Supervisory Committee (CNSM).

“I do not know, we need to have a discussion with the Romanian Association of Banks to see. I tried to have this discussion within three players: the National Bank, the Ministry of Finance and the Romanian Association of Banks. That has not been acted upon, and I said it would have been fair to have a talk at the same table. However, the Central Bank asked for a discussion in the CNSM on February 4th, I understand that this topic is of interest and then it is right to have a straight discussion with all players involved,” Orlando Teodorovici said.

Previously, the BNR stated in a press release that “it is willing, the same as before, a loyal cooperation with the Ministry of Public Finance”, but that it takes “a prior consultation with BNR when decisions that affect the central bank’s monetary policy and the financial stability of the country are taken”.

MFP planned in January 2019 loans from commercial banks of RON 3.26 billion, of which RON 2.9 billion through government bonds auctions and treasury bills, to which the amount of RON 360 million can be added through additional sessions of uncompetitive bids related to bond auctions. The amounts will be used to refinance public debt and to finance the state budget deficit. Compared to November, the loans planned by MFP are higher by RON 1.02 billion.

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