Radio România Internațional

Tag: bank

March 27, 2024

Visit – The National Bank supports and encourages initiatives aimed at the development of the capital market in the Republic of Moldova, and as an institution responsible for prudential supervision and the stability of the financial market, we want to facilitate the free movement of capital and financial services, the governor of the National Bank of Moldova, Anca Dragu, said on Wednesday in Bucharest. She emphasized that these are actually chapters of negotiation for Moldova’s accession to the European Union, “chapters in which the National Bank has a leading role, so that the Republic of Moldova should enjoy prosperity and economic stability”. Romania commits and continues to commit unconditionally to supporting the European path of the Republic of Moldova, said, in turn, the speaker of the Romanian Senate, Nicolae Ciucă. They participated, on Wednesday, together with the Moldovan Prime Minister, Dorin Recean, and the head of the Moldovan Parliament, Igor Grosu, in a forum organized by the Stock Exchange, an event that promotes solid economic cooperation and the interconnection of the capital markets between the Republic of Moldova and Romania.

Bessarabia – Romania is among the staunch supporters of the European future of the Republic of Moldova, as its citizens wish, the Romanian Prime Minister Marcel Ciolacu said in a message on the occasion of the Day of Bessarabia’s Union with Romania. The Romanian Cultural Institute – ICR and its representations abroad are organizing a series of cultural events to mark 106 years since this historic moment. Today, at the National Art Museum of Romania, a painting exhibition is opened that includes 100 works by artists from the Republic of Moldova, and the National Theater in Bucharest will host performances in which Romanian and Moldovan actors will participate. On March 27, 1918, the Chisinau State Council voted in favor of the Union of Bessarabia with Romania, Bessarabia being a Romanian province annexed by the Russian Empire in 1812, after the Russian-Turkish war (1806-1812). This historical act opened the process of the unification of Romania, completed on December 1, 1918, through the Union of all the Romanian provinces which were then under foreign rule. 22 years later, in the summer of 1940, following an ultimatum, Stalin’s Moscow annexed both Bessarabia and northern Bukovina, territories that currently belong to the former Soviet Republics of Moldova and Ukraine, respectively.

Brancusi – The Pompidou Center in Paris hosts an exhibition-event dedicated to Constantin Brâncuşi, considered the father of modern sculpture, which can be visited until July 1. Hundreds of sculptures, photographs, sketches and archival images are on display in the exhibition which includes Brâncuşi’s Workshop, the place where the great Romanian artist created and lived, alongside works borrowed from major international museums. All of Constantin Brâncuşi’s works from the Romanian heritage are exhibited, sent by the National Art Museum of Romania and the Art Museum in Craiova (southern Romania). ‘Brâncuşi is an artist who was very little exposed during his life, as he preferred to invite his contemporaries to come to his workshop. He liked to control all dimensions of the presentation of his sculptures’, explains Ariane Coulondre, curator of the exhibition, in a press release. The Brâncusi Retrospective at the Pompidou Center, the first in the last almost 30 years and the largest ever organized event, is held with the support of the Romanian Embassy in France and the Romanian Cultural Institute.

Deficit – Romania’s budget deficit reached, after the first two months of the year, almost 29 billion lei (about 6 billion Euros), accounting for 1.67% of the Gross Domestic Product, show data published by the Finance Ministry. The deficit is almost double compared to the same period of last year. The Prime Minister Marcel Ciolacu said, however, that it would observe the 5% threshold estimated for the end of the year. The economy is self-financing and we will have the largest economic growth in Europe, the Romanian PM also said.

Handball – CS Dinamo Bucharest defeated the Danish team Bjerringbro Silkeborg, score 37-34, on Tuesday evening, at home, in the first leg of the play-off of the EHF European League men’s handball competition. The second leg will take place on April 2, in Silkeborg. Trained by the Spanidh Xavi Pascual, the Romanian champions start with the first chance in the return leg to qualify for the next stage. Afterwards, the winners of the quarterfinals will play in the Final Four Tournament (semifinals and finals). The German team Fuchse Berlin is the holder of the trophy. (LS)

27 March 2024
December 22, 2023 UPDATE

GOVERNOR
Romanian Anca Dragu has been designated governor of the National Bank of the
Republic of Moldova for a 7-year mandate. A decision in this respect was
endorsed by Parliament in Chisinau with 58 yes-votes on Friday. The Moldovan
MPs’ decision was motivated by Dragu’s major expertise with Romania’s Central
Bank and with the International Monetary Fund as well as with public and EU
accession policies. Dragu has worked for more than 15 years for Romania’s
Central Bank and the International Monetary Fund and was Public Finance
Minister in Bucharest between November 2015 and January 2017. In 2020 she held
the position of the Romanian Senate president and is presently an MP with the
Save Romania Union.

DAY 22 December
1989 is being celebrated as the Day of the Victory of the Romanian Revolution. It
marks the flight of communist dictator Nicolae Ceausescu after protests broke
out in Timisoara on 16th December and spread to many other places
around the country and the capital Bucharest. 1,166 people were killed in the
December 1989 uprising, according to the Institute of the Romanian Revolution.
They are commemorated these days in Bucharest and across the country in
military and religious ceremonies. Those who took part in the Revolution and
the families of the victims prayed and laid flowers in the cities were the
fiercest clashes took place.

FLIGHTS From June next year, direct flights from Bucharest to the
United States will be resumed after 20 years. Tickets are already being sold,
as the company in charge of the flights has received permission from the US
Department of Transport. The flights between Bucharest’s Henri Coanda Airport
and New York’s John F. Kennedy Airport will take place four times a week on
Monday, Wednesday, Friday, Saturday and return. The trip will last under ten hours.
The first flight is scheduled for 7th June 2024.

(bill)

22 December 2023
October 6, 2023 UPDATE

SUMMIT Several EU leaders
have rejected 2030 as the year of the EU enlargement at the summit held in
Granada on Friday. The next stage of the enlargement is supposed to include the
states of the Western Balkans, Ukraine and the Republic of Moldova but the
Spanish Foreign Minister has underlined that every country must first do their
homework and only then join the European Union according to their merits.
Another major issue on the agenda was migration and in this respect Poland and
Hungary have made it clear they oppose any common agreement. Cyber-security,
military security and climate change have also been high on the agenda.
Romanian president Klaus Iohannis has also attended the event.

VISIT Romanian
president Klaus Iohannis is paying a formal visit to Portugal until Monday upon
the invitation of his Portuguese counterpart, Marcelo Rebelo de Sousa.
According to the Presidential Administration, the visit will kick off with the
participation of the Romanian president, as a special guest, in the anniversary
meeting of the Arraiolos Group, hosted by the Portuguese president in Porto on
Friday. The meeting marks 20 years since the debut of this informal platform of
consultations at the presidential level among 16 EU countries. On Saturday,
Iohannis will be received by his Portuguese counterpart in Lisbon. According to
the presidential administration, the
field of defence is one of the key elements of the bilateral cooperation
with a view to consolidating the allied defence on NATO’s Eastern Flank, an
outcome of this cooperation being Portugal’s participation with a ground force
contingent to the multinational NATO brigade in Romania. On the sidelines of
the aforementioned visit, a series of bilateral documents will be signed in the
fields of energy, investment and trade. In another development, Klaus Iohannis
will be paying a formal visit to Hungary on Wednesday for talks with his
Hungarian counterpart Katalin Novak.

MECHANISM The
mechanism that will allow the import of limited quantities of grain from Ukraine
and the Republic of Moldova only on the basis of a license was discussed by the
Bucharest Government in Thursday’s meeting. The measure aims to protect
Romanian farmers after the European Commission lifted the restrictions imposed
on Ukrainian grain imports, Prime Minister Marcel Ciolacu said. He stated that
this mechanism, agreed with all parties involved, will allow imports only on
the basis of an authorization for limited quantities of grain and will apply
only to Romanian farmers and processors who demonstrate that they need
additional quantities to replenish stocks. This is how we ensure that
products that comply with quality standards will arrive on the Romanian
market, Ciolacu pointed out. He also said that Romania continues to support
Ukraine with all its strength, but that it is mandatory for the
Bucharest administration to protect the work of Romanian farmers. Recently, the
Romanian Minister of Agriculture, Florin Barbu, has said that the agricultural
products that are subject to import and will fall under the scope of this
mechanism are wheat, corn, sunflower seeds and rapeseed.

RATE The
National Bank of Romania (BNR) has decided to maintain the monetary policy
interest rate at 7% per year, a value that has remained unchanged since January.
The board of directors of the BNR also kept unchanged the interest at which
commercial banks can borrow from the BNR and the interest they receive when
they keep money in deposits established at the central bank. According to the
new assessments of the BNR, the annual inflation rate will continue to decrease
until the end of the current year. Starting next year, however, inflation will
be influenced by the existence of major risks, arising from the new
fiscal-budgetary measures adopted by the government and the degree of
absorption of European funds, as well as the war in neighboring Ukraine and
economic developments below expectations from Europe.

(bill)

6 October 2023
Advices on Romania’s economy

The longest-lasting leading figure in
post-communist Romania is the country’s Central Bank governor, Mugur Isarescu.
Born in 1949, Isarescu is also the longest lasting chief of a central bank in
the world as he has been on the job since 1990. As an independent candidate, in
1999 he headed the country’s then center-to-right coalition government and in
the next year he ran, without being successful though, for the country’s
presidential seat, mustering only 9.54% of the votes in the first round.

He came back to the
position of governor, which he has kept for nearly a quarter of a century.
Although not very popular with some, his competence and determination haven’t
been contested yet.

Over the past three
decades, Isarescu has cooperated with many heads of government and Finance
Ministers, so his statements have more weight than the emphatic platitudes uttered
by the Romanian politicians who have often failed to fulfil their pledges. On
the very day, the new PSD-PNL government, headed by social-democrat Marcel Ciolacu,
was instated, the Central Bank governor called on the political decision-makers
to adopt what he called a rational thinking. During a new round of talks on the
country’s economic prospects, he mentioned the two directions any development
strategy should be based on: coordination with the European economy and also the
need for balancing the domestic supply-demand ratio. Agriculture, certain industrial areas or
the green energy, he says, should become top priorities and more relevant on
certain markets, such as the food market, currently under fierce competition.
The governor has confessed, his amazement at Romania’s huge food imports in
spite of having a significant agricultural potential.

The business environment prospects have
been presented by the president of the Romanian Chamber of Trade and Industry,
Mihai Daraban, who believes that a viable economic model must start with the
idea of association in the agrifood field, which has registered a significant
imbalance in the country’s international trade. Poland, which boasts one-third
more surface than Romania, has only 90 thousand farmers, whereas Romania has
796 thousand, most of them owners of small farms. So it has become now very
difficult to talk about competitiveness in this area,’ says the head of the
Trade Chamber, whom the economic media has dubbed ‘the employer of employers’. Daraban
has been pleading for Romania’s administrative-territorial reshuffle, which
means the reduction of the number of communes and counties by bringing them
together under the same umbrella, and implicitly cutting down costs with the local
administrations, which proved ineffective and terribly expensive.

(bill)

16 June 2023
May 3, 2023

BANK The foreign currency reserves of the
National Bank of Romania were in excess of EUR 53 bln at the end of April, up 0.21%
compared to the previous month. The gold reserves stay at 103.6 tonnes. High
forex reserves ensure investor confidence, analysts explain, adding that this
was mostly due to EU fund receipts.

UNEMPLOYMENT The unemployment rate in Romania dropped slightly, from
5.5% in February to 5.4% in March, but unemployment among youth remains high,
at 22.2%, the National Statistics Institute reports. The number of people
between the ages of 15 and 74 receiving unemployment benefits in March was over
453,000, a decrease compared both to the previous month of this year and to the
corresponding period in 2022. Among men, the rate was 5.8%, whereas the
proportion of unemployed women was 5%. For adults aged 25 to 74, the
unemployment rate stood at 4.4%.

CORONATION Margareta, Custodian of the Crown of
Romania, and the Prince Consort, will take part on Saturday in the coronation
of King Charles III of the United Kingdom of Great Britain and Northern Ireland,
the Royal House of Romania announced today in a Facebook post. In the 157 years of existence of the Royal House of
Romania, the connection with the British royal family has been steady, based on
admiration, respect and affection, both in its official dimension, representing
the two nations, and in its private, family aspect, reads the post. The Royal
House adds that this reliable relationship has spanned the 19th, 20th
and 21st centuries and five generations.

PRESS The World Press Freedom
Day celebrated on the 3rd of May occasioned the opening of a special
exhibition at the National Romanian Literature Museum in Bucharest. The event
was organized jointly with the Romanian Union of Professional Journalists. The
exhibition, which opens a series of events devoted to journalists in all fields,
is intended as a starting point for a future Museum of Romanian Press. The World
Press Freedom Day was proclaimed by the UN General Assembly in 1993, and is
designed to highlight the importance of and the need for freedom of expression.

EDUCATION A draft law regulating higher education in Romania was
approved by the specialist committee in the Chamber of Deputies, with a number
of amendments. Among other things, grants and training programmes will be
offered every year to Romanians from abroad who wish to study in Romania. Welfare
grants may be received concurrently with other types of grants, should student
meet relevant criteria. As for salaries, higher education institutions may
increase salaries within their approved budgets. Fines have also been
introduced, ranging from EUR 20,000 to 40,000, for those who sell BA, MA or
doctoral theses online, in violation of intellectual property rights. The new
laws on the undergraduate and higher education sectors will most likely be
subject to voting in the Chamber of Deputies next week. The Senate is then to take
its final vote.

GRAINS The European Commission
announced exceptional and temporary preventive measures on imports of
a limited number of products from Ukraine. They concern only 4 products-wheat, maize,
rapeseed and sunflower seed-and are designed to alleviate logistical
bottlenecks concerning these products in Bulgaria, Hungary, Poland, Romania and
Slovakia. Meanwhile, Romania will receive an additional EUR 30 bln
to support farmers affected by the cheap grains imports from Ukraine. (AMP)

3 May 2023
October 27, 2022 UPDATE

TALKS At the end of the visit he paid to Brussels Romanian Prime
Minister Nicolae Ciuca announced he agreed with the president of the European
Commission, Ursula von der Leyen, that it is possible to replace the 9.4% GDP
cap for pension expenses within Romania’s National Plan of Recovery and Resilience
with another indicator, which takes into account the World Bank survey and with
a financial discipline indicator. At the same time, the Prime Minister also
held talks with the EU commissioner for transports, Romanian Adina Valean,
after he had earlier met the delegation of the Romanian MEPs. Besides his
official agenda, on Wednesday he met Romanian and Belgian business people. The
talks the Romanian official held in Brussels focused on Romania’s accession to
Schengen. Ciuca said that all his interlocutors had underlined the support
Romania enjoys to continue and complete the process of entering Europe’s border-free
area.

MONEY The European Commission on Thursday paid the 2.6 billion
Euros of the first request submitted by Romania as part of the Mechanism of
Resilience and Recovery and the money is already in Romania’s accounts, the
Ministry of Investment and European projects has announced. The sum, made up of
1.8 billion Euros in grants and 0.8 billion in loans, has become available
after Romania has met the 14 required objectives. ’27 October 2022 is a
historic day for Romania, as it’s not only the moment confirming the
appreciation of the consolidated efforts at the governmental level but also the
proof that we have started off on the road of reforms in the fields of sustainable
mobility, curbing carbon-dioxide emissions, education and healthcare’, field
minister Marcel Bolos says.

RATE The unemployment rate in Romania stood at 2.88% in late
September, 0.03 down as compared to the same period last year. According to
data published by the National Agency for Employment, the number of the jobless
is on the rise compared to the previous month; these are mainly people with
ages between 40 and 49 and less than 5% of them boast a university degree.

DAY Orthodox Christians, who are in the majority in
Romania, on Thursday celebrated St Dmitry the New, the protector saint of
Bucharest. The Patriarchal Cathedral has been home to the saint’s relics since
1774. Dmitry the New was a monk born in the 12th century in the
village of Basarbovo, near the Bulgarian city of
Ruse. The legend has it that after his death, the monk appeared in the dream of
a sick young woman indicating the place where she would find his grave and that
if she touched his body she would recover. The villagers dug out the place
indicated in the dream and found the unaltered body of the monk.

PRICES Energy prices are to decline by 11% next year
according to a World Bank projection. The slower pace of world economic growth
and the COVID restrictions in China may lead to a deeper fall, the World Bank
also notes. Energy prices will still be 75% higher than the average of the last
five years. The level of global debt, which exceeds 300 thousand billion
dollars, must be kept in check, or more people will face poverty. The World
Bank head David Malpass told the BBC that supporting and stimulating economies
was the best solution during the pandemic, but that the consequences of those
expenses are beginning to appear in the form of a rise in inflation and
interest rates. Any future support, including helping people cope with energy
bills, must be clearly targeted, he recommended.

(bill)

27 October 2022
More expensive loans

The 3-month ROBOR index, based on which the costs of consumer loans in domestic currency with variable interest rate are calculated, continues to rise, and has reached 8.11% per annum. The last time the index was higher, namely 8.15%, was on February 1, 2010, the central bank says. Early this year, the index was 3% per year.

Almost half of the loans in domestic currency taken out in Romania are currently based on the ROBOR index. The financial analyst Adrian Negrescu says a lot of Romanians now have to pay 50% or even 80% higher instalments then last year.

A first solution would be to switch to the consumer loan reference index (IRCC), so that instalments may drop for 1-2 years, Adrian Negrescu believes:

Adrian Negrescu: “In order to switch from Robor to IRCC, borrowers only need to go to the bank where they have taken out the loan and submit an application, which is usually resolved within 30 days. It is a lawful request that banks are bound to comply with as quickly as possible. If indeed the bank in question denies the application, which is a possibility, the solution is to take the matter to the Banking Dispute Settlement Centre (CSALB), an institution that helps people, free of charge, to negotiate new lending terms and conditions with banks.”

Another option is loan refinancing, based on offers from various banks. For those who lose their jobs, the only solution is to postpone repayment for a few months, until they manage to get hired.

Adrian Negrescu: “For those experiencing difficulties, i.e. who fail to get a new job, personal bankruptcy or transferring an asset in lieu of payment are 2 other options that may help them get rid of the burden of a loan they can no longer afford.”

The financial analyst also warns that as long as inflation remains high, interest rates will continue to go up. He says ROBOR is expected to reach 9% in the forthcoming period.

A rise in the key interest rate is the most frequently used measure by central banks, which are in charge of securing price stability, when they try to keep inflation in check. To reduce the cash available in the market, they raise interests and thus deter further borrowing. But the measure also impacts older loans, in that it pushes variable interests up. The more expensive the loans given by central banks to commercial banks, the higher the interest rates in the interbank market.

At European level, several central banks have increased interest rates because of the global economic situation. Europe has been struggling with the COVID-19 pandemic, which has upset supply chains, and in addition, since February, the war in Ukraine and the sanctions against Russia have been shattering the energy market. (AMP)

5 August 2022
Romania’s Central Bank wants a firmer grip on inflation

Romania’s National Bank has decided to raise by a
point the reference interest rate up to 4.75% in order to get a firmer grip on
liquidity on the currency market and also to keep the present level of the minimum
reserves for liabilities in the local and foreign currencies of the credit
institutions.

The Central Bank’s move has not been anticipated by pundits,
some have envisaged a smaller increase in the reference interest rate though,
as it stood under 2% at the beginning of the year. Governor Isărescu has
pledged that the Central Bank will be using all the instruments available to
keep liquidity under control. According to him, the inflation will continue to
rise at a lower pace by the end of this quarter. And that renders expert
forecasts outdated, mainly because of the price hikes higher than expected.

Mugur
Isărescu: Essential in the worsening of the inflation forecasts are the
higher dynamics in fuel, gas and electricity prices in the following months,
even against the background of the support schemes applied. Worth mentioning are
some basic effects and the prices in processed food mainly due to the stronger hikes
in crude, energy and agri-food products against the background of the war in
Ukraine and the sanctions entailed. Additional inflationist effects are
expected on the segment of the selling costs, spurred by the higher prices
applied by the railway company CFR, as well as the tobacco prices due to the
increased excise.

Under the present circumstances, the Central Bank
has raised the reference interest rate in an attempt to keep prices at bay. Governor Isărescu has explained that given the present
situation, central banks must find a balance between fighting inflation and the
risk of bringing economies to recession. In his opinion, it is vital that
resources, represented by the EU funds made available to Romania, be capitalized
upon properly, including those conditioned by the implementation of reforms.

The reference interest rate is very important being largely
employed by natural persons, companies, banks at the level of the entire
economic system. For instance, banks refer
to it whenever they give loans to clients, natural persons and companies. The
loan cost fluctuates according to the reference interest rate and as it went up
lately it dealt a heavy blow to those with credits in the national currency.
There are also solutions and experts recommend refinancing and opting for a
fixed interest rate. On the other hand, inflation rate in May this year stood
at 14.5% and experts believe the Romanians are in for more price hikes in
products and services in the following months.

(bill)

7 July 2022
Between stagflation and economic growth

Romania’s economic status is growing ever more disquieting,
amid pessimistic forecasts by the central bank and the European Commission’s
economic report, which estimates that central and eastern European countries
will have higher inflation rates this year than the rest of the EU. According to
Brussels, after a strong, 5.9% growth rate in 2021, Romania’s economy is likely
to slow down to 2.6% this year, as inflation erodes people’s incomes and Russia’s
aggression in Ukraine affects economies, supply chains and investments.

For next year, the European Commission expects economic
growth to pick up slightly, to 3.6%, following a possible drop in inflation. Unemployment
is predicted to stay at around 5.5 %, with prices likely to reach a peak this
year and gradually go down in 2023. Meanwhile, the public deficit will reach 7.5%
of GDP this year, possibly dropping to 6.3 % in 2023.

According to EU officials, this year’s inflation will
get to a record-high 8.9% in Romania, almost double the 4.1% rate in 2021, and
will slow down to 5.1% in 2023.

In turn, the National Bank confirms the rise in
inflation and does not expect it to go below 10% until the second half of next
year. Meanwhile, the National Statistics Institute confirms that in the first
quarter of this year the economic growth rate stood at over 5% compared to the
previous quarter and 6.5% compared to the first quarter of last year. Nonetheless,
the central bank adviser Lucian Croitoru believes that in the forthcoming
period Romania might be facing stagflation. This is more dangerous than extended
inflation, in that it also involves stagnant economic output.

Lucian Croitoru: The first half of the word comes from stagnation.
Which is not necessarily the same as recession, it might only be a slow, 1.5-2.5%
growth, which is not something we are used to in Romania. So I think this is
very possible. On the one hand, short-term inflation encourages production, even
stimulates a rise in budget revenues, but mind you, this is fuelled by
inflation and is not going to last. On the other hand, the war may entail lots
of challenges, it is unpredictable, we have no forecasts on how a conflict like
this may end, with so many factors involved. But, as Hemingway put it, inflation
and war are always solutions to policies lacking principles.

If the Romanian economy
enters the predicted stagflation period, prices and unemployment will rise,
expenditure will be low, life will be ever more expensive and economic
difficulties will deepen. (AMP)

18 May 2022
New inflation forecasts

The inflation presently affecting the entire world is seriously diminishing the already small incomes of the Romanians whose purchasing power lowers by the day. Experts estimate that a more difficult period is to come. Inflation shot up to 8.5% in Romania in February this year. However, the rise is relatively low as compared to the previous month and significantly lower than in other countries like the Baltic states for instance. Although in the Eurozone, the Baltic states have an inflation rate between 11% and 14%, while Poland and Bulgaria have already exceeded 9%.

Together with Hungary and Belgium, Romania is at the middle of an EU ranking. In a post on OpiniiBNR.ro blog, the spokesman for Romanias Central Bank (BNR), Dan Suciu, said that Romania had the highest inflation rate in the EU last year. However, the Central Bank believes that inflation will exceed the previous midyear forecast of 11% due to price hikes in fuel, energy and cereals caused by the war in Ukraine, as Cristian Popa, member in the Central Banks board of directors explains.

Cristian Popa: “On one hand we are seeing measures aimed at subsidizing and capping energy prices as they have a major impact on the inflation rate. These measures would lower the inflation rate, but after its publication, the war in Ukraine broke out and we are actually seeing higher prices in oil, gas and various issues in the production line. We are also seeing higher prices in cereals and they have a major impact on basic inflation. We must redo the arithmetic as we are actually witnessing an economic slowdown though the growth rate remains positive, and there is a certain pressure upward.”

According to Cristian Popa, the Central Bank is fighting inflation but also the panic and unrest in this period full of uncertainties, adding that the bank has this situation, which isnt an easy one, under control.

As for the interest rate, the BNR representative says it presently is at the level before the pandemic. BNR is expected to again raise the reference rate in an attempt to keep things under control. On the other hand, Romanias economic growth this year has been estimated around 2-2.5% as compared to 4% before the beginning of the conflict in Ukraine.

(bill)

22 March 2022
Romanian – US cooperation in the field of energy

Romania has huge economic potential, and it is a very good place for investors, not only from the US, but from around the world, the US Ambassador to Romania Adrian Zuckerman said early this month, voicing hopes that the economic partnership between the 2 countries would catch up with and even outperform the military one.

One of the key areas where Washington and Bucharest work together is the field of energy. In order to meet its energy security and decarbonisation goals, Romania intends to upgrade one of the reactors of the Cernavoda nuclear power plant and build another 2.

The project is estimated to cost 8 billion US dollars, and the US Export-Import Bank will provide up to 7 billion USD for its funding. Once completed, the project will enable the Nuclear Power Plant in Cernavodă, south-eastern Romania, to cover around 40% of the countrys electricity needs. This is double the rate covered at present, says Cosmin Ghiţă, general manager of Nuclearelectrica:

Cosmin Ghiţă: “With Units 3 and 4, this means doubling the current nuclear power capacity, and this is only one of the benefits. In Romania, the nuclear industry provides around 11,000 jobs. Once these projects are started, the number of jobs could reach over 20,000. As for the benefits of revamping Unit 1, these are evident: operating this facility for another 30 years, at less than half the cost of a new reactor.

The agreement between Romania and the US on cooperation in the Cernavoda nuclear power projects was signed in Bucharest on Wednesday by the Romanian economy minister Virgil Popescu and the US ambassador, in the presence of the interim PM Nicolae Ciucă.

The terms of the documents had been agreed on in early October, during the economy ministers visit to the US, when the memorandum of agreement with Exim Bank was also signed.

This week, the USA Exim Bank president Kimberly Reed went to Cernavodă, and in a subsequent meeting with minister Virgil Popescu, he emphasised that the institution is ready to provide funding to Bucharest for other projects as well. The US might also fund the development of natural gas in the Black Sea.

Romgaz is currently negotiating the acquisition of the US company Exxons stake in the Neptun Deep offshore project, and once investments in the Black Sea are restarted, Romania may become Europes largest natural gas and energy producer.

Ambassador Adrian Zuckerman, attending the meeting, emphasised the importance of Romania securing its energy independence and added that the visit made by the Exim Bank president highlights the US commitment to Romania. (tr. A.M. Popescu)

10 December 2020
The Central Bank of Romania, 140 years of history

The two
principalities inhabited by Romanians, Moldova and Wallachia united
in 1859. The young Romanian state gained its independence following a
war in 1877-1878, and added Dobrogea to its territory. The third move
was to set up a central bank, a crucial element in building a
sovereign country. The institution came to being back in 1880 and in
the following year Romania became a kingdom, which meant that the
fresh state got legal personality on the world’s map.

The central bank,
also known as the National Bank of Romania, appeared after the
promulgation of a law on setting up a bank for accounts and
circulation, published in the Official Gazette on April 17th
1880. It had an initial capital of 30 million lei, out of which a
third was state capital while the other two thirds were private
capital. Its most important mission was to issue banknotes accepted
in various transactions and deals.

The first banknotes
issued were of 20, 50, 100, 500 and 1000 lei and its first director
was economist Eugeniu Carada, who linked his name to the
institution’s early days, its expansion all over the country and
the first issues of banknotes and coins.

The bank’s premises were located in
downtown Bucharest, the old city center and works on these premises
commenced in 1884 under the guidance of two architects from France,
Albert Galleron and Charles Garnier.

Since its birth until the First World
War, Romania’s Central Bank offered credits and a lower discount
rate. Between 1890 and 1892 the bank shifted from the silver-gold
monetary standard to only gold.

The First World War threw the Romanian
society in turmoil as it happened with the entire continent. The bank
supported the war efforts just like the entire Romanian society but
the latest developments on the battlefield forced the bank’s
relocation to Iasi, in northern Romania, together with the other
state institutions. Romania’s treasure was transferred to Moscow
for safekeeping during the gloomy days of the war but was never
returned by the Russians. After the end of the Great War, the central
bank got the mission to integrate the economy of the Romanian state,
which had taken back its provinces until then occupied by the former
Russian Empire and Austria Hungary.

After the loss of
its treasure to Russia and the devastating WWI, Romania’s Central
Bank got a new mission, to stabilize the national currency and make
it convertible. The bank also fought to stabilize the currency and
credit system during the big economic crisis between 1929 and 1933.

Just like in the previous war, the
bank supported the country’s efforts in the Second World War.
During the war, the bank was forced to hide the country’s treasure
at the Tismana Monastery in western Romania, a lesson learnt from the
first world war.

Ioan Lesenciuc curator with the
Treasure Museum of the National Bank of Romania gave us a brief
history of the treasure odyssey in mid-1940s.

Ioan Lesenciuc:
Romania
managed to recover its gold resources between the two world wars but
1944 proved to be another bad year. After the battle of Stalingrad,
the German troops had to fall back and the Soviet advance was
threatening the treasure housed by the bank. In April 1944, the heavy
allied bombing of the oil fields in Ploiesti and Campina, southern
Romania, as well as the capital Bucharest proved to be another threat
for the bank. The authorities decided to move the treasure to safer
places and talks were held with representatives of two countries,
Turkey and Switzerland. Turkey announced that its laws didn’t allow
for the transfer whereas Switzerland voiced readiness to host the
treasure adding that the passing of the convoy through Central
Europe, under German control at that time, wouldn’t be a good idea.
General Antonescu who was ruling Romania at that time said, the
treasure must remain on the Romanian territory and not be divided. He
gave the bank the green-light to hide the treasure wherever it
considered safe.

After the end of the war, Romania
entered a new era, communism, and its political regime brought major
changes to the national economy, which was being controlled by the
state. The national bank became state-owned and the credit system was
reformed after the Soviet model. Until 1970, the taxes and interests
were controlled by the state but after 1970 the bank was allowed to
make its own decisions. Construction works on the new premises of the
country’s central bank started in 1940 and the new building was
inaugurated ten years later.

After the fall of the communist regime
in 1989, Romania’s Central Bank resumed the prerogatives it was
stripped off between 1945 and 1989.

(translated by bill)

23 May 2020
February 4, 2020 UPDATE

MOTION The leadership of Parliament in Bucharest has decided that the
censure motion tabled by the opposition Social Democrats (PSD) against the
Liberal government be subjected to debates and voted upon on Wednesday
afternoon. The PSD move comes after the government led by Prime Minister
Ludovic Orban assumed responsibility for a draft law on returning to the
two-round election of mayors. Signed by 208 MPs, the motion was read on Monday
before Parliament in plenary session. According to the signatories, the
government must be dismissed for having amended the election law shortly before
the upcoming election, which runs against Constitutional Court rulings and
recommendations from European institutions. In order for the government to be
sacked, the motion needs to be endorsed by 233 MPs.

VISIT Romania’s president Klaus Iohannis will be meeting the European
Council President Charles Michel in Brussels on Friday. According to the
Romanian presidential administration, the meeting will focus on negotiations
over the 2021-2027 EU budget. This is part of a string of meetings that the
president of the European Council is having with leaders of the EU member
states with a view to preparing the extraordinary summit on February 20th,
devoted to the next multi-annual budget.

RESERVES The Romanian Central
Bank’s currency reserves have increased by 8% as against last year. According
to data provided by the bank, the level of the gold reserve has remained at
103.6 tonnes, worth some 5 billion Euros. At the end of last month, the bank’s
hard currency reserve stood at 35.5 billion Euros, as compared to little under
32 billion in late 2019. The increase is due mainly to the collection of 3
billion Euros resulting from the Euro bonds emissions placed two weeks ago. Experts
say that, because of the size of its economy, Romania cannot place itself among
the Europe countries with large international reserves, but its reserve is
consolidated.

(translated by bill)

4 February 2020
December 15, 2019 UPDATE

ASEM The Romanian foreign minister Bogdan Aurescu Sunday had a meeting with New Zealands Under Secretary for Foreign Affairs, on the sidelines of the Asia-Europe meeting of foreign ministers held in Madrid. The 2 officials discussed areas of bilateral cooperation, with a focus on strengthening political and diplomatic dialogue and on cooperation within international organisations. Minister Aurescu also emphasised the importance of bilateral economic cooperation, and of bolstering relations between the EU and New Zealand. Also on Sunday, Aurescu met with the Romanian students who attended the Model ASEM Youth Conference, and voiced his support for the youth organisations that work on the sidelines of the summit meetings. The 14th ASEM foreign ministers meeting, held under the motto “Asia and Europa – together for effective multilateralism, is chaired by the EU High Representative for Foreign Affairs and Security Policy, Josep Borrell. Taking part are foreign ministers and senior representatives of over 50 European and Asian countries. This is the last event in the ASEM ministerial meeting series taking place in 2019 in which Romania has been an active contributor, including an ASEM education ministers meeting hosted by Bucharest on May 15th-16th, during the Romanian presidency of the Council of the EU.

COMMEMORATION Timişoara, the western Romanian city where the anti-communist uprising started 30 years ago, Sunday hosted a roundtable and a Freedom March to commemorate the event. On Monday, the Senate and the Chamber of Deputies convene in a joint solemn session devoted to the anniversary of 3 decades since the anti-communist revolution in Romania. In turn, the European Parliament will commemorate on Monday, on the first day of the new plenary session in Strasbourg, the 30 years since the Romanian Revolution, with a resolution on this topic scheduled to be adopted Thursday. The anti-communist revolution started out on December 16th in Timişoara, which on December 20th became the first Romanian city free of communism. On December 21st, the uprising started to spread to reach Bucharest and other Romanian cities. More than 1,000 people died and some 3,000 were wounded in the clashes that followed across Romania, the only country in the Eastern Bloc where the regime was ousted violently and where the communist leaders (Nicolae and Elena Ceausescu) were executed.

LEGISLATION The Social Democratic Party in opposition will refer to the Constitutional Court on Monday 2 bills that the Liberal Government has these days rushed through Parliament by means of a special procedure. The bills concern the length in service requirements for entry-level magistrates and measures in the road transport sector, the Social Democratic leader Marcel Ciolacu has announced. The Government has also announced plans to request Parliaments confidence on a number of other measures, such as scrapping several provisions in the Government Order 114, dubbed “the greed tax order, through which a year ago the Social Democratic government had introduced additional taxes for banks and caps on the electricity and natural gas prices charged to households. After a first reading of the bill amending this Order, the Government announced it targeted the deregulation of natural gas prices as of July 1, 2020 and of electricity prices as of December 31, 2020, the scrapping of the 2% fee paid by energy companies to the state budget, and the repeal of provisions that allowed for money in privately-managed pension funds to be transferred to the government-managed fund.

MIGRANTS Romanian border police found 20 citizens from Iraq, Syria, Libya, Algeria and India trying to illegally cross the border into Hungary through the Vărşand, Borş and Nădlac II checkpoints in western Romania, the Border Police Inspectorate General announced on Sunday. According to the source, 2 of them are children, the others are men aged 22 to 40, all of them having sought asylum in Romania. They said they were trying to get to a Western European country. The police investigate them for attempted illegal border crossing, identity fraud and forgery.

PROTEST Hundreds of people protested in Buzau, south-eastern Romania on Sunday against the recent dismissal by the Liberal Government of researcher Costel Vînătoru as head of the Vegetable and Ornamental, Aromatic and Medicinal Plant Gene Bank based in the city. Costel Vînătoru, a corresponding member of the Academy of Farming and Forestry Sciences, is the initiator of the Gene Bank, set up in September by the Social Democratic Government. He has been working in vegetable research for 34 years, working to reduce Romanias reliance on seed and vegetable imports.

BREXIT Queen Elizabeth II will set out on Thursday Prime Minister Boris Johnsons legislative agenda following his December 12th election victory. According to the Royal House, the agenda will include a pledge to bring the EU Withdrawal Agreement bill back to parliament before Christmas. The parliamentary approval for the Brexit deal is expected to be a mere formality now, when the Tories have a comfortable 365-seat majority after their biggest national election win in decades.

(translated by: Ana-Maria Popescu)

15 December 2019
The Central Bank’s yearly report

The European
Commission has revised its forecasts on Romania’s economic growth rate this
year up to 4% pointing out to a rise in its GDP of up to 3.3%. However, there
is a significant difference between the European Commission forecasts and those
made by the authorities in Bucharest who drew up the country’s budget based on
a 5.5% growth.

According to the
EU Executive’s summer estimates, the growth rate is going to slow down next
year to 3.7%. Public consumption remains the economy’s main engine, spurred by
the latest pay rises. Investment is also on the rise chiefly thanks to the
recovery experienced by the construction sector, stimulated by fiscal measures.

The Commission believes
inflation will stay around 4.2% this year and at 3.7% next year. Romania has a
robust economic growth though it remains chiefly based on consumption, the
country’s central bank governor Mugur Isarescu says. During the presentation of
the bank’s annual report, Isarescu has explained how the economic growth is
backed less by investment whereas the export’s negative contribution has been
significantly higher than in 2007.

Mugur Isarescu: We have an economic growth or domestic absorption to be more correct,
beyond what the economy can provide. Consumption has been boosted more than
what the economy can provide and part of this growing demand, coming from pay
rises, from stimulated consumption, could not be covered from the domestic
output and was covered from imports instead. The consolidated budget was being kept
under 3% but it’s been the last time since 2015 when we are able to meet our
structural deficit budget around the limit of 3%. Budget, salary and investment
expenses are going in opposite directions.

Mugur Isarescu
has declared himself satisfied with the low fluctuation of the national
currency and also with the public debt, which remained at the same debt-to-GDP
ratio, around 35%, being among Europe’s lowest.

Mugur Isarescu: In spite of negativistic forecasts, the debt rate didn’t rise as against
the GDP. Of course, the GDP’s rapid growth has largely contributed to that.
Public debt stands around 35% of GDP, one of the lowest in Europe and we’d
better keep it at this ratio.

This performance
has also been noticed by the rating agencies, and that could allow us to get bigger
loans from the international market at relatively low costs, Mugur Isarescu has
explained. The problem is how we use money and why we see this deficit increase.
Referring to the inflation rate, the central bank governor said that after an
increase in the first half of last year, towards the end of the year, it
reached the level of 2017.

With a mandate
of almost 30 years at the helm of the country’s central bank governor, Mugur
Isarescu says that Romania boasts a credible central bank stable at international
level, which has obtained good financial results.

(translated by
bill)

11 July 2019