The economic effects of the presidential election
The political instability in Bucharest and the result of Sunday's presidential election have had a negative impact on Romania's economy.
Sorin Iordan, 07.05.2025, 14:00
The result of the first round of the presidential elections in Romania and the political chaos resulting from the resignation of the Social Democratic Prime Minister Marcel Ciolacu, with the the PSD-PNL-UDMR coalition government, have shaken the already precarious stability of the national economy. The situation created has left its mark on the exchange rate, on the evolution of the main indices of the Bucharest Stock Exchange and has led to an increase in the interest rates at which the Romanian state borrows.
After the National Bank of Romania (BNR) had managed to keep the leu’s exchange rate relatively stable against the single European currency for a long time, the value announced by the BNR on Tuesday increased to almost 5.04 lei for one euro. On the same day, the three-month ROBOR index, based on which the cost of consumer loans in lei with variable interest is calculated, rose to 6.08% per year, from 5.9%. Also, the 6-month index, used in calculating interest on mortgage loans in lei with variable interest rate, went up by 0.16%.
The BNR spokesman, Dan Suciu, explained that, although the depreciation of the leu against the euro does not exceed 2%, it has consequences on costs for the Romanian state, but that the Central Bank has the necessary resources to keep things under control. Dan Suciu: “Of course, crossing the 5 lei threshold has generated some concern. What really concerns us is the fact that we are in a period of electoral and political instability, in which a whole series of questions that need to be answered at a political level are not being answered, in the context in which we have a series of capital outflows, of money, from the country and few inflows on the markets. In the previous period, the situation was the opposite. Until we return to a similar flow, it is difficult to say that we will have the stability that we had at the exchange rate levels that we had. The National Bank has the resources. And yes, we are confident that we will find the new balance on which to base both the exchange rate and interest rates.”
The Bucharest Stock Exchange continued its downward trend on Tuesday, after, on Monday, the main indices decreased by almost 3% compared to the values recorded on Friday. There is a state of concern regarding the economic situation, aggravated by the resignation of the prime minister – said political commentator Bogdan Chirieac: “The main problem of Romania, at the moment, is the economic situation, and the fact that Prime Minister Marcel Ciolacu rushed to resign is the worst thing that could happen. I don’t think the world should be more worried than when Giorgia Meloni won the elections in Italy, and now Giorgia Meloni is the transmission belt between the European Union and the Trump administration. Attacking Romania at this moment does a lot of harm, because if Romania, if it gives in economically – and there are reasons to believe that there is a risk of something like that happening – the entire European Union will have a problem and the entire Eastern Flank.”
This period of uncertainty and instability could persist at least until after the decisive round of the presidential elections, which is scheduled for May 18. (EE)
