Romanian banks could reduce new tax by boosting lending-FinMin

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BUCHAREST, March 22 (Reuters) - Romanian banks could bring a new tax on their financial assets down to zero if they boost lending and narrow the interest rate differential between deposits and loans, Finance Minister Eugen Teodorovici said on Friday.

The new bank tax was introduced in late December along with new energy and telecoms taxes as the government struggles to keep its budget deficit within European Union limits.

The taxes and other measures announced in the emergency decree sent shares and the leu currency to record lows and Standard & Poor's briefly considered downgrading Romania's credit rating outlook.

The government, which has said it aimed to lower borrowing and energy costs for Romanians, has been negotiating potential changes to the decree with the affected industries.

The bank tax was initially tied to a specific level of money market interest rates, which are also used as a reference point for household loans. But tying the tax to money market rates threatened the central bank's independence, so the government has agreed to remove the link, Teodorovici said.

The proposed bank tax will be lowered, and several types of financial assets, including state debt and government-funded programmes will be exempt from it.

In addition, Teodorovici said banks could pay less tax if they boost lending by 8 percent on the year and narrow the interest rate differential between deposits and rates by 4 percentage points.

Teodorovici also said more talks were needed for energy and telecoms sectors to agree potential changes.

The other measures announced in the decree included changes to Romania's 11-year-old mandatory private pension scheme, slashing management fees for fund managers, forcing them to raise their share capital by an overall 800 million euros and enabling Romanians to withdraw from private pension funds after contributing for five years.

Teodorovici said the only change under discussion here was the share capital requirement, which could cause a brief delay in implementation until the ministry and the funds reached an agreement.

Changes to the bank tax and potentially the other levies and measures could be approved by March 28. Otherwise, the December decree would come into effect at the end of the first quarter. (Reporting by Luiza Ilie; Editing by Elaine Hardcastle)

2019-03-22 13:53:40

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