Romania’s forex reserves up on Resilience Facility money

Romania’s forex reserves up on Resilience Facility money
By bne IntelliNews January 4, 2022

Romania’s foreign exchange reserves at the National Bank of Romania amounted to €40.47bn at the end of December, almost €1.2bn more compared to the end of November and nearly €3.1bn more than at the end of 2020.

The increase in December was due to robust forex inflows of over €5bn, which included the €1.85bn first tranche granted by the European Commission under the Resilience Facility. 

Another slightly larger tranche is expected to boost the country’s forex reserves in early January while the €29bn expected by Romania under the Resilience Facility (of which €14bn is grants) will keep the forex reserves on an upward path in the medium term.

Separately, the forex inflows will strengthen the local currency, furthermore creating conditions for its appreciation in real terms over the coming years.

The forex outflows from the central bank’s vaults were high in December as well (€3.83bn) and, out of this, the service of the public external debt accounted for only €216mn.

The typical reason for such large outflows are the central bank’s interventions on the forex market, but this time the funds might have been simply passed to the Ministry of Finance, the recipient of the €1.85bn Resilience facility grants.

The gold stock remained steady at 103.6 tonnes and its value amounted to €5.36bn.

Thus, at the end of 2021, Romania’s international reserves (foreign currencies and gold) stood at €45.83bn, compared to €44.59bn on 30 November 2021 and €42.52bn at the end of 2020.