Analysts on the financial market do not rule out a slight depreciation of the leu at the beginning of October, and a weaker leu on 1 October would generate higher revenues for the state budget in 2010.
“I do not believe that the central bank has a deliberate policy to depreciate the leu in this period to contribute to a higher value of excise taxes. But I do not rule out the possibility that the leu will depreciate in this period, not necessarily for this reason,” financial analyst Aurelian Dochia told Business Standard.
Other economists said that expectations, rather than direct intervention by the central bank, could depreciate the national currency. “I reject all form of manipulation by the central bank of the exchange rate. The wide variations of the exchange rate are of a speculative nature,” said Bogdan Baltazar, former President of BRD.
In 2008, the excise tax was applied at the exchange rate set on 1 October 2007, of RON 3.3565/€1. For this year, excise taxes were computed at the exchange rate registered on 1 October 2008, of RON 3.73/€1. For next year, the value of excise taxes will be computed at an exchange rate of RON 4.2/€1, nearly one seventh more than the previous value.
“Theoretically, an increase in excise taxes will generate a rise in products subject to excise tax, such as cigarettes, fuels, etc. If this had been last year’s situation, products would surely have become more expensive, because consumption was on the rise at that time, and the economy was profitable. Now, merchants are facing a drop in sales, and a wave of new price hikes is going to affect their business even more. I believe they will assimilate this increase in excise taxes without raising the prices of products, or at least not drastically,” said Lucian Anghel, Chief Economist of Banca Comerciala Romana (BCR). Florin Pogonaru, President of the Association of Romanian Businesspeople (AOAR) supports this opinion. “Crisis reflexes are that prevail. The population has reduced consumption, and a rise in excise taxes will not be very visible with sales down,” explained Pogonaru.
