Radio România Internațional

Tag: economy

  • IMF mission to Bucharest

    IMF mission to Bucharest

    Is Romania the only or the most successful story of the IMF? The answer would be yes if we believe the Social Democratic PM Victor Ponta, according to whom the Romanian authorities have, to a large extent, acted upon the advice of the IMF, the World Bank and the European Commission, Romania’s international lenders. An IMF delegation led by the head of the IMF mission to Romania, Andrea Schaechter, held talks in Bucharest with top Romanian officials.



    The IMF experts have recently revised upwards the estimates regarding Romania’s economic growth. The GDP is expected to increase by 3.4% in 2015 and by 3.9% in 2016. Given that the latest stand-by agreement concluded with the IMF expired, the Romanian finance minister Eugen Teodorovici says Bucharest could apply for a new loan. But, after the meeting of the IMF delegation with the budget committee members, the Liberal Gheorghe Ialomitianu said, quoting the IMF experts, that a new agreement was not possible:



    “At present Romania cannot conclude an agreement with the IMF because opinions about the credibility of its government are extremely divergent. The Cabinet did not observe what Romania undertook under the agreement that expired. The government says it cannot respect those recommendations made by the IMF and the European Commission, while the IMF cannot endorse what the government is doing, because it does have its responsibilities”.



    Viorel Stefan, a Social Democrat, denies that the IMF made such a blunt statement, but acknowledged that there are certain obstacles.


    “There are talks about a flexible agreement, which does not involve a loan, but only technical assistance provided by the IMF. This would be a gain, because we all know that when the IMF gives you good credentials, you are regarded with more confidence on the capital markets. On the other hand, we must admit that structural reforms still need to be implemented. For 25 years we have been striving to reform state-owned companies”.



    The Romanian government is also blamed for the slow pace of reforms in the administration. The IMF expressed concern related to the fiscal and budget situation for 2016 and 2017, when Romania risks missing the deficit targets set. In a communiqué signed by the head of the IMF mission to Bucharest, the IMF estimates a budget deficit of 3% of the GDP in 2016 and an even higher rate in 2017, because of a combination of measures to massively reduce taxes and fees, on the one hand, and to increase salaries, on the other hand. The IMF recommends a 1.5% budget deficit target for 2016. According to the IMF, Romania’s macro-economic indicators have improved considerably, and protecting them is crucial in the context of global risks, especially in the emerging economies.

  • August 28, 2015 UPDATE

    August 28, 2015 UPDATE

    16 Romanian citizens are being investigated in the Hungarian capital city for participating on August the 26th in two different cases of human trafficking. In a news conference given in Bucharest, the press service of the Romanian Foreign Ministry announced two other Romanian nationals had been taken into custody in Hungary and are being investigated for the same reason. As regards the scores of migrants found dead in a truck which was left abandoned near the Austrian-Hungarian border, the Romanian Foreign Ministry has confirmed the owner of the truck is not a Romanian national and no Romanian citizen got involved in this dramatic incident, investigated by the Austrian police.



    The total population residing in Romania remains under 20 million people, according to preliminary data from the National Statistics Institute. On January 1, 19,861,000 people were residing in Romania, down 85,900 since the beginning of the previous year. The urban and female population account, respectively, for 53.8%, and 51.1% of the total, and the ageing phenomenon is deepening, the difference between the population over 65 and the young population of up to 14 years of age having widened to more than 300,000 people. The survey also indicates that Romania remains an emigration country, with a number of emigrants 42,000 higher than the number of immigrants last year.



    The Bucharest Court has dismissed a notification filed by the management of the Romanian Air Traffic Authority (ROMATSA) regarding the unlawfulness of the strike announced by employees. Their union leaders announced an all-out strike starting September 1, unless an agreement is reached with the Transport Ministry on the unions demands. Air traffic controllers want a pay rise, the reduction of the retirement age from 65 to 55, improved working conditions as well as the resignation of the management. On July 15, the employees went on a two-hour token strike, an unprecedented situation in the Romanian air transport system. According to the Romanian Air Traffic Authority, which currently has around 1,500 employees, between 2,500 and 3,000 planes transit the Romanian territory every day. On Wednesday, union leaders from the state-owned sector announced that 85,000 public sector employees might express their solidarity with the air traffic controllers planned strike.


    Romanian managers believe the economic situation of the country will improve slightly until the month of October, a conjectural investigation conducted by the National Statistics Institute shows. It is estimated that the volume of activity will grow in three of the four domains included in the analysis, the processing industry, trade and services, against the backdrop of a relative stability of prices. Also, the number of employees will go up in the field of trade and will further be stable in other sectors. The Secretary General of the Association of Romanian Businesspeople, Cristian Parvan, has told Radio Romania this high level of optimism is determined by the VAT reduction for foodstuffs and the decrease in oil price on the international market.



    A delegation of the committee for the Romanians around the world with the Romanian Senate has started a working visit in Herta and Storojinetz counties and to Cernauti (Chernivtsy) in Ukraine. The members of the delegation will hold talks with Ukrainian government officials and with MPs on the rights of the Romanians living in the neighbouring state. The president of the committee, senator Marcel Bujor has told Radio Romania that most ethnic Romanians in Ukraine do not have access to education in their native language, do not have newspapers in Romanian, are facing difficulties in the effort to preserve their religious identity and do not have a representation at parliamentary level.



    In Romania, the autumn session of the Baccalaureate exam concludes today, when over 36,000 high-school graduates give the last written test in their chosen major. The first results will be announced on September 1, appeals may be filed on the same day. The final results will be made public on September 4. Around 55,000 high school graduates took part in the autumn session of the Romanian Baccalaureate.



    The date of early legislative election in Greece was set for September the 20th. Former Greek prime minister Alexis Tsipras, who stepped down on August 21, agrees to this date, whereas some opposition parties, such as the New Democracy (conservative) and the Popular Unity (of the Syriza splinter group), prefer the date of September 27th, to benefit from a longer electoral period. The announcement is officially opening the election campaign and was made public just minutes after the first meeting of the new interim Greek government, led by Vassiliki Thanou.



    The Romanian Youth Orchestra will open in Bucharest on Sunday night the 22nd “George Enescu International Festival. Nearly 2,500 foreign artists and 500 Romanian ones will take part in this years edition of the Festival. The participating orchestras include the San Francisco Symphony, Israel Philharmonic, conducted by the world famous Zubin Mehta, the Vienna Philharmonic, the Bavarian State Orchestra, Staatskapelle Dresden, London Symphony Orchestra, Saint Petersburg Orchestra, Monte Carlo Philharmonic, Royal Concertgebouw Orchestra of Amsterdam. According to the organisers, the 2015 edition of the largest cultural event organised in Romania and the worlds leading promoter of the works of the great Romanian composer George Enescu, will take place between August 30 and September 20, and will consist in 58 indoor concerts and many other outdoor events.



    For the first time in 12 years, Romania will have no representatives in the group stage of the European inter-club football competitions. Although on Thursday night Romanian champions Steaua defeated Norways Rosenborg Trondheim, 1-0 away from home, the Romanians were knocked off the Europa League play-off, because the Norwegian team had won in Bucharest 3-0. The new failure comes after Steaua was also eliminated from the third round of the Champions League by the Serbian team Partizan Belgrade. Also in Thursdays Europa League play-off, Astra Giurgiu failed to qualify, after losing 0-2, against the Dutch team AZ Alkmaar, which it had beaten in the first leg. The other two Romanian teams in the competition, vice-champions ASA Targu Mures and FC Botosani, were sent home from the qualifiers stage. According to Romanian sports media, the last hope for the local football fans remains the national team, which is the leader of the preliminary group of next years European Championships. Romanias next match in the group is scheduled for September 4, when the national team takes on Hungary in Budapest.

  • Global economic forecasts

    Global economic forecasts

    This week the World Bank has upgraded to 3% its economic growth forecast for Romania this year, after issuing a lower estimate in January. This rate is above the global average of 2.8%. Additionally, in 2016 Romania is expected to report a 3.2% growth, and a 3.5% growth in 2017, which is however by 0.4% less than the original estimate made this past winter.



    The economic progress of Romania, but also of the Czech Republic, have also been acknowledged by the EU Statistics Office Eurostat. The two countries have the biggest economic growth in the first quarter of this year, above the 4% mark. As compared to the same period of last year, Romanian and Czech economies went up by 4.2%.



    The EUs economy grew overall by 1.5%, a growth due mostly to a 2.4% spike in Britains economic growth rate. Other European economies reported less spectacular growth rates: 1% in Germany, 0.7% in France and 0.1% in Italy. Nevertheless, Romanian agriculture, the countrys engine behind economic growth, risks facing a prolonged draught this harvesting season.



    Given that agriculture accounts for 5 to 7% of Romanias GDP, this might overturn the positive growth forecast. Barely has summer set in and many crops are already withering away under the scorching sun. Romanias watershed has also decreased alarmingly, which raised fears regarding the minimum amount of water required for animal breeding, let alone farming. The most affected regions are the countrys east and south, where ground water reserves have hit a dangerous low.



    The irrigation system built before 1989 is supplying water to barely 10% of the farmland. In Suceava, northeastern Romania, farmers expect the potato yield to go down to a third of the original harvest estimate. The situation is just as dire in Bacau in the east, where corn production is particularly affected by the dry season. Most wheat crops have begun to dry off, which, specialists argue, might dramatically reduce harvesting figures. On the bright side, according to the National Institute of Statistics, Romanian industry went up by 3.4% in the first quarter of 2015 as compared to the same period of 2014. The manufacturing industry reported the highest increase, of 3.9%.

  • The Week in Review 11-15 May 2015

    The Week in Review 11-15 May 2015

    Romanian President Klaus Iohannis pays an official visit to the Vatican and Italy.

    On a 3-day official visit to Italy and the Vatican, the Romanian head of state, Klaus Iohannis, was received by Pope Francis on Friday, whom he invited to pay a visit to Romania. On Thursday Iohannis visited the Universal Exhibition in Milan dubbed “Feeding the Planet, Energy for Life”. On Thursday evening Iohannis met with representatives of the Romanian community in the city, on which occasion he voiced his dissatisfaction with how the voting by mail project advances. This is the Romanian president’s second official visit to Italy, after the one in April 2014, when he met with his counterpart Sergio Mattarella, PM Matteo Renzi and the Senate Speaker Pietro Grasso.



    Economic forecasts for Romania.


    Romania and Cyprus had the most substantial economic growth in the EU in the first quarter of the year, as compared to the previous three months, according to preliminary estimates released on Wednesday by the European Statistics Office. In figures, thanks to a 1.6% growth rate, the two countries are the EU leaders, followed by Spain, Bulgaria, Slovakia, France and Hungary. The year-on-year rate Romania has reported, 4.2%, is also the largest in the EU, followed by Hungary, with 3.1%. Also this week the European Bank for Reconstruction and Development has improved Romania’s economic growth forecast this year up to 3% from 2.8% in January. For 2016 the European Bank for Reconstruction and Development estimates that the Romanian economy will advance by 3.2%, one of the highest growth rates in the emergent Europe.



    Romanian senators green lighted the VAT decrease on foodstuffs.


    The reduction of the VAT for foodstuffs as of June 1st was green-lighted by the Romanian senators. The measure is aimed at reducing the VAT from 24% to 9% for all foodstuffs, non-alcoholic drinks, and restaurant and catering services. Seen by the executive as a way to encourage consumption and implicitly to consolidate the growth trend reported by the Romanian economy, the measure was regarded with skepticism in terms of the significant drop in shelf prices it was supposed to produce. The calculations presented by the Agriculture Ministry point to a drop in prices for foodstuffs of about 12%. Most Romanians believe that the reduction of the VAT for foodstuffs and non-alcoholic drinks is a good measure both for them and for the economy, shows an opinion survey made by INSCOP.



    The Romanian Foreign Minister’s proposal at the NATO meeting in Turkey.


    Attending the NATO Foreign Ministers meeting in Turkey, Romanian Foreign Minister Bogdan Aurescu recommended an integrated strategy targeting both NATO’s southern and eastern vicinities. Bogdan Aurescu pointed out that given the challenges to the Alliance’s security, all decisions taken at the NATO summit in Great Britain should be implemented. The recommendation comes against the backdrop of mounting instability in Northern Africa and the Middle East over the course of last year, which is affecting the entire Europe. The NATO foreign ministers have decided at the meeting in Turkey to maintain the NATO presence in Afghanistan even at the end of its current mission, that is after 2016. The new NATO mission, expected to be smaller than the current 12,000-strong training operation, will be civilian-led and include both soldiers and civilians. Its aim will be to advise and instruct Afghan security forces. Over 600 Romanian military are currently deployed in Afghanistan.



    The Social Democrat Liviu Dragnea received a 1-year suspended prison sentence.



    Romanias regional development minister and deputy prime minister, the Social Democrat Liviu Dragnea, on Friday received a 1-year suspended prison sentence for using his influence and authority, as secretary general of the Social Democratic Party, with a view to obtaining undue benefits for himself and other persons. This means that Liviu Dragnea will not serve time in prison but he will be banned from holding public office. The decision can be appealed. Right after the sentence was delivered, Liviu Dragnea resigned from the Government and has announced he will also resign his position as executive president of the Social Democratic Party.


    According to the anti-corruption prosecutors, Dragnea, as his partys secretary general, organized a system by which local party members sent back real-time information about the turnout and the results, which is illegal before the voting deadline expires and he told local party members and mayors to use whatever means to swell the turnout.



    Romanian films in Cannes.


    The film “Head Up” by French filmmaker Emmanuelle Bercot, featuring Catherine Deneuve in the leading role, opened the Cannes Film festival on Wednesday. Over 50 productions have been included in the festival, of which 19 will compete for the Palme d’Or. 2 Romanian productions have been included in the Un Certain Regard section, namely, “The Treasure” by Corneliu Porumboiu and “One Floor Below” by Radu Muntean. Andrei Cretulescu’s short “Ramona” is also part of the competition.







  • The Week in Review 15-20 December

    The Week in Review 15-20 December

    Romania’s President-elect Klaus Iohannis will be sworn in on Sunday



    Romania’s president-elect Klaus Iohannis will take the oath of office on Sunday, during a solemn Parliament session, one month after winning November’s elections. On Thursday, Klaus Iohannis resigned from the leadership of the National Liberal Party, the main opposition party, leaving the party’s helm in the hands of parliament member Alina Gorghiu, a 36-year-old lawyer who had been the Liberals’ spokeswoman during the elections. Gorghiu, the first female president of the National Liberal Party, will be interim president until 2017, when a congress that will make official the fusion of the Liberals and Liberal Democrats is held. Until then, Alina Gorghiu will lead the party alongside the Liberal Democratic Party leader, Vasile Blaga.



    Romanian Government undergoes reshuffle


    Romania has a new government, the 4th one headed by the Social Democrat Victor Ponta. The new coalition government is made up of the Social Democratic Party, the Union for the Progress of Romania, the Conservative Party and the Reformist Liberal Party. The latter, a center right party, is a dissident faction of the National Liberal Party, in opposition, that replaced the Democratic Union of Ethnic Hungarians in Romania which left the government. As many as 8 new ministers are part of the government’s new line up while 14 others have kept their seats. PM Ponta has given assurances that the new government will maintain all those measures that render the private business environment stable and predictable, that is the 16% flat tax, the tax exemption for reinvested profit, the decrease in the employers’ social security contribution and the proposal to further decrease the VAT for certain categories of farm products. High on the Government’s agenda, are, according to Prime Minister Ponta, the projects related to European funds, the transport infrastructure, the judiciary, education, agriculture and the environment.


    JINGLE


    Romania’s 2015 budget, on Parliament’s agenda


    The budget bill and the social security bill for 2015 have been for a whole week on the agenda of the Bucharest Parliament, after being passed by the country’s legislative body last Friday. According to PM Ponta, the 2015 budget does not provide for any increase in taxes and duties. The new budget has taken into account a 2.5% economic growth, an annual inflation rate of 2.2% and a budget deficit of 1.8%.



    The Government’s emergency ordinance, sanctioning political party switching, declared unlawful by the Constitutional Court


    The Constitutional Court of Romania has ruled that the law by means of which Parliament adopted the Government’s emergency ordinance, sanctioning political party switching, goes against the Constitution. Adopted last year in September, the ordinance allowed numerous local officials to change parties, seeking personal interests. At present the situation of those officials who switched parties in the 45 days when the law was effective is till unclear. The Opposition believes the ordinance has encouraged political party switching, particularly in the context of November’s presidential election.



    Romania marks 25 years since the 1989 anti-communist revolution


    Romanians have commemorated 25 years since the anti-communist revolution of 1989. Timisoara is the city where the Romanian Revolution started, on December 16 that year. The protest movement spread throughout the country and the revolutionary movement culminated with the fall of Ceausescu’s regime on December 22. Over 1000 people died in Bucharest, Timisoara and several other cities. The events of December 1989 were evoked in the capital city Bucharest, in a special session of Parliament.



    The helicopter crash in eastern Romania rekindled the debate on the effectiveness of the emergency intervention system.


    The helicopter crash in southeastern Romania, which killed four people, has raised new doubts regarding the activity of the Inspectorate for Emergency Situations. A helicopter of the Mobile Emergency Service for Resuscitation and Extrication (SMURD) crashed in Siutghiol Lake, northern Constanta, merely 500 meters from the bank. At the time of the crash the helicopter was on its way back from a medical mission. Doubts emerged over rescue operations, which were carried out with great difficulty and delay. None of the people onboard was saved. Military prosecutors have launched a criminal investigation for second-degree murder. The head of the Constanta County Inspectorate for Emergency Situations was sacked, while the Constanta County prefect was also relieved of his duties. The Government believes the Department for Interventions in Emergency Situations needs to undergo an external audit regarding the training level of people in the system and the procedures involved in such cases.



    Traian Basescu attended his last European Council summit as president of Romania


    Romania’s president Traian Basescu attended the last meeting of the European Council during his current tenure. EU leaders decided to set up the European Fund for Strategic Investments, based on contributions from Member States worth 315 billion euros. Regarding the developments in Ukraine, heads of state and Government decided to continue their support for the reform process in this country. At the same time, the acting president of the European Council Donald Tusk of Poland pointed out that Brussels needs a long-term strategy on Russia. European leaders did not agree on additional sanctions on Moscow, a country currently undergoing a severe financial slump. Instead the EU adopted a new series of measures regarding Crimea, in order to highlight Europe’s opposition towards the “illegal annexation” of the peninsula by the Russian Federation.

  • Romania’s Public Budget

    Romania’s Public Budget

    Based on a forecast GDP growth of 2.5%, Romania’s budget for next year reflects the acceleration of structural reforms in key areas, the Government argues. The authorities will push for a 3% economic growth rate, but this also depends on global economic developments, the PM’s adviser Cristian Socol explained.



    This year as well, the budget focuses on investments and creating new jobs, with the funds earmarked for investments up 24% (nearly 2 billion euros) compared to 2014. According to Cristian Socol, the budget is designed to also support private businesses, by increasing the co-funding for European projects, state aid and state guarantee schemes, as well as by providing more support to farmers, specific facilities for high-value foreign investments and the development of industrial and technological parks, and incentives for the technical education field.



    Authorities expect the absorption of EU structural and cohesion funds to improve by up to 80%. In full compliance with Romania’s commitments to the European Commission, the International Monetary Fund and the World Bank, the budget is based on a deficit of 1.83% of the GDP and a 2.2% inflation rate, and guarantees Romania’s financial security by means of buffer funds of 9.25 billion euros, which cover the state’s obligations to its citizens, in terms of pensions and salaries, for six to seven months. This eliminates most risks related to a possible resurging of recession in the eurozone or to problems in international financial markets.



    The goal of further strengthening the country’s fiscal system, which is a prerequisite for improving the sustainability of public finances and the credibility of reforms, is accompanied by a complementary objective, that of strengthening the social safety net, which was strongly affected by the austerity measures taken during the crisis. In 2015, the national minimum wages will be substantially increased, and so will the salaries of teachers and the healthcare staff. Pensions will go up 5% and support measures will be taken for vulnerable categories, such as those living in severe poverty or people with disabilities.



    The largest amounts have been allotted to the ministries of labour, finances, agriculture, European funding, transport and economy. The smallest budgets are those for the healthcare, culture, administration and the interior ministries.



    The Liberals, in Opposition, have already announced they will vote against the budget bill in Parliament, on grounds that the text does not explicitly identify the source of the funds for investments.

  • Inflation and the relationship with the International Monetary Fund

    Inflation and the relationship with the International Monetary Fund

    According to the National Institute of Statistics in Romania, consumer prices went up 1.44% in September compared to the same period last year. This increase has somewhat appeased worries about the revision of the estimated inflation rate down from 2.2 to 1.5% for this year and from 3 to 2.2% in 2015 made public by the National Bank. Economic analyst Constantin Rudnitchi explains:



    “This is a tendency that has generated worries across Europe, namely deflation, the decrease in prices. Romania does not find itself in this situation, it is not facing deflation, but in Europe this issue has been raised repeatedly. A drop in prices will only lead to losses on the market.”



    The National Bank estimates that tobacco and alcohol prices will drop slightly, while other products subject to excise duties, such as fuel, may become more expensive. National Bank governor Mugur Isarescu explained in a report that the revision of the targeted inflation rate is a result of lower demand and the low inflation rate across the euro zone. As for the risks facing Romania’s economy, Isarescu spoke about the geopolitical situation and the possible delay of certain reforms. Romania has committed itself to its international lenders to continue fiscal and budgetary reforms.



    According to the representative of the International Monetary Fund for Romania and Bulgaria, Guillermo Tolosa, in the last 5-6 years, Romania has made considerable efforts to consolidate its economy and make it more resistant to shocks, but now it is very important not to jeopardise this significant progress.



    Romania’s latest agreement with the Fund, the third since 2009, is of a stand-by type and amounts to 4 billion euros. It will expire next year and will probably not be renewed. The Fund has delayed talks on this agreement for after the second round of the presidential elections on November 16th.



    In October, the Fund revised its forecast on Romania’s GDP for this year up to 2.4%, but the authorities in Bucharest are expecting a 2.8% economic growth rate, despite the fact that the budget is based on a 2.2% GDP increase. In 2013, the Romanian economy grew by 3.5%, which is one of the highest growth rates in Europe.

  • Chisinau-Moscow Frictions

    Chisinau-Moscow Frictions

    The economy of the Republic of Moldova focuses increasingly on the EU market. In the first five months of the year, its exports to the EU grew by over 22%, while exports to the Commonwealth of Independent States dropped nearly 19%, although these still account for the bulk of the Moldovan exports.



    According to the deputy Agriculture Minister of Moldova, Vladimir Loghin, quoted by the Radio Romania correspondent, in order to offset the Russian economic embargo on Moldova, Romania has provided practical support and is working on a programme to support fruit and vegetable producers and processors. Bucharest has mediated contacts between the Moldovan economic mission and leading commercial networks.



    Thanks to the efforts made by the European Commissioner for Agriculture, Dacian Ciolos, for Trade, Karel de Gucht and for Enlargement, Stefan Fulle, the EU decided to return to Moldova the duties on apple, plum and grape exports, whose quotas have already been doubled.



    After prohibiting wine imports from Moldova last September, Russia has recently denied the access of meat products, fruit and vegetables from Moldova. Moscow says that the entry into force of the association agreement between the Republic of Moldova and the EU generates contradictions between the EU market and the CIS. But according to Pirkka Tapiola, head of the EU delegation in Chisinau, the EU has never asked Moldova to impose trade barriers on Russia, because in fact the EU association and free trade agreement is fully compatible with the free trade agreement Moldova has with the CIS.



    Trade restrictions are just one of Moscow’s weapons, which has threatened Europe with higher energy prices, Russia’s instrument of choice for undermining the EU solidarity. Moscow’s economic retorts affect not only the Republic of Moldova, but also Poland, Ukraine, Romania and even the United States. They come at a time when the EU and USA impose sanctions on Moscow over its involvement in the conflict in east Ukraine. The third round of sanctions has been initiated almost concurrently by the EU and USA, and its effects on the Russian economy are expected to be substantial and relatively quick.