What the newspapers say: June 30, 2010 

The government and the National Central Bank are negotiating with the IMF the inflation target for the end of the year after the Executive’s decision to increase VAT from 19 to 24%.Elsewhere in the news, floods left damages of over 700 million euro and meteorologists warn that this is not over. Last but not least, find out how much the Romanian currency dives.

Gandul reads that the executive is currently negotiating with IMF representatives the inflation target for the end of the year. Several ministers declared for the newspaper that most probably, the inflation will reach somewhere between 6-7 percent.

Culture minister Kelemen Hunor declared that the officials calculated the impact for each percent of VAT increased and was added to the current inflation. Environment minister Borbely on the other hand warned that inflation might be higher.

However, the ministers avoided an answer on how much the VAT will be maintained, considering that the government’s initial decision to cut pensions by 15% was announced for a 6 months period. Prompted about the stability of the exchange rate, Interior minister Blaga is not worried.

The inflation rate is one of the most important points in the IMF agreement and one of the convergence criteria which the country needs to comply with to join the euro zone.

Floods killed 19 people so far across Romania and caused damages of 700 million euro, Gandul reads. Four counties in North East were hit by the floods and 221 km of roads affected. Overall, the floods killed 19 people and 2 went missing.

PM Emil Boc promised to offer 5000 lei each family who lost a loved one in the floods. He said that for the construction of social houses, the VAT will be 5%. 2400 people were evacuated so far. Hidrologists issued a red code alert across Romania in East and North East of the country. The new alert is valid until Wednesday.

Elsewhere in the news, Romania libera reads about the exchange rate where the Romanian currency marked a new historical minimum to the euro. The depreciation of the national currency in the last days is caused by an emotional reaction.

The national currency, that closed the day at an official rate of 4.3523 lei for one euro was also helped by a favorate report of the Societe General and a possible intervention of the Central Bank. The French at Societe Generale recommends investors to purchase lei, since it is a very attractive placement.

Since Monday, the number of people purchasing euro from the exchange houses decreased substantially. People did not run at the exchange houses, as they did on Monday.