Radio România Internațional

Tag: IMF

  • The Bucharest Government Continues its Mandate

    The Bucharest Government Continues its Mandate


    The Social Democrat Victor Ponta, who has been the head of Romania’s Government since the spring of 2012, faced another no-confidence motion on Tuesday, the fourth so far. This time, however, the motion was rather atypical, as the argument put forth by the Opposition had to do more with the prime ministers legal problems rather than with the government’s technical errors.



    The Liberals, who initiated the no-confidence motion, argued that Victor Ponta can no longer be head of the government because he lost his credibility after being sent to court by the National Anti-Corruption Directorate for forgery of private documents, accessory to tax evasion and money laundering.



    Alongside the former Social Democratic senator Dan Sova, Ponta is accused of involvement, while a lawyer, in a case of legal assistance contracts signed by the Turceni and Rovinari power companies that damaged the state budget with 16 million euros. Nevertheless, as of June 5, when the anti-corruption prosecutors made public the charges brought against the Prime Minister, Victor Ponta has repeatedly dismissed them and has turned down President Klaus Iohannis’s calls for his resignation.



    Predicted and anticipated by almost all commentators, the failure of the motion dubbed “You must choose between Romania and its compromised Premier, Victor Ponta. Sack Victor Ponta!” gives him the perfect chance to continue his mandate. That is because the Opposition is allowed to file a similar motion only next spring.



    In order to pass, the motion needed to be supported by at least 276 senators and deputies, that is half plus one of the total voters. It only got 207 votes in its favour and 8 against it, as – after having publicly expressed their support for the Cabinet – the MPs in power, that is the Social Democratic Party, the National Union for the Progress of Romania and the Alliance of Liberals and Democrats, refused to cast their vote.



    Once the Government’s position reconfirmed, the Finance Minister, Eugen Teodorvici announced that Romania would officially ask the IMF to sign another loan agreement with Romania. Negotiations, he said, would focus on structural reforms and not on maintaining the budget deficit. He last precautionary agreement that Romania signed with the IMF in 2013, worth 2 billion euros, expired on Saturday. Its purpose was to protect the Romanian economy from possible shocks from foreign markets.



    Since the start of the economic crisis, in 2009 and up to present, Romania has forged three consecutive loan agreements with the IMF and the EU, which supported the government policies in the budgetary field, the privatisation of state-owned companies and macroeconomic stability. However, in the first half of this year, the Romanian authorities have passed a comprehensive tax cut package under the new Fiscal Code, which the Romanian Central Bank, the Romanian Fiscal Council and also the international financial institutions have criticised, souring the relationship between the Government and the IMF.


  • Good Economic Results

    Good Economic Results

    The
    precautionary agreement with the IMF, which Romania signed in 2013, expired a
    few days ago. Although the Romanian economy has registered a significant growth
    lately, the Romanian Government plans to conclude another precautionary
    agreement to protect Romania’s finances against market shocks. XX is in the
    studio with more, in a commentary by Andrea Bojoi.






    The 2 billion Euro precautionary
    agreement signed by Romania and the IMF in 2013 expired on Saturday. In reality,
    the accord has actually been blocked in the past six years, because of the
    disagreements between Bucharest and IMF officials regarding the Romanian
    Government’s fiscal plans. In early 2015, authorities tried to adopt a big
    tax-reduction package through the new Fiscal Code, but representatives of the
    international financial institutions, just like the Fiscal Council and the
    National Bank, criticized the initiative.

    One day after the agreement expired,
    Prime Minister Victor Ponta wrote on a socializing network that in 2015
    Romania’s economic situation has changed dramatically as compared to 2009, when
    the first accords with international lenders were signed, and Romanians’ living
    standards and incomes have increased significantly. To make his point, the Premier
    presented some comparative figures. In 2009 the economic growth stood at minus
    6,6%, as compared to 3.7% growth rate registered in the second quarter of 2015.
    The budget deficit in 2009 was 9% of the GDP, while in 2015 the estimated
    deficit stands at 1.45% of the GDP. Ponta also wrote that Romania is as safe
    and stable economically as any developed member of the EU, quoting an
    information published by the Standard and Poors rating agency.

    According to the
    same agency, Romania’s risk of defaulting on payments is only 7.8%, as compared
    to the period between 2009 and 2011, when Romania was among the 10 countries
    with the highest risk of defaulting. The IMF has recently confirmed that, if
    the trend is maintained, Romania is likely to outrank, from an economic point
    of view, countries such as Portugal, Greece and the Czech Republic. Although
    the current agreement with the IMF has expired and the country’s economic
    situation is good, the Finance Minister Eugen Teodorovici has announced that
    Romania plans to start negotiations with the international lenders for a new
    precautionary agreement, which would come into force in 2016. In his opinion,
    such an agreement is necessary to protect Romania’s finances against potential
    market shocks and to facilitate cheaper loans from the world markets.

    According
    to experts, the explanation for such a decision lies with the current context,
    in which the provisions of the new Fiscal Code and the upcoming salary increase
    in the budget system are estimated to bring the deficit close to 3% in 2016. In
    their opinion, negotiating a new loan will be more difficult now, given that
    the Romanian officials have almost all the time disagreed with the IMF with
    regard to the latest accord. Still, they are expecting a clear direction in the
    relations between the two parties to be established in the coming period.



  • September 26, 2015 UPDATE

    September 26, 2015 UPDATE

    VISIT –Romania’s President, Klaus Iohannis, who is currently on a visit to the US, on Saturday met with representatives of the Romanian community in New York. His Saturday’s agenda also included talks with his Chinese counterpart, Xi Jinping, and his participation in a dinner offered by Japan’s Prime Minister, Shinzo Abe. On Friday, he attended the opening of the UN Summit, which adopted an ambitious sustainable development plan for the following 15 years, whose annual estimated costs stand at thousands of billions of dollars. Romania’s President, whose visit will come to a close on September 29, is also due to meet US Vice-President Joe Biden, for talks on the refugee crisis Europe is facing and the fight against terrorism.



    COOPERATION — Romania’s president Klaus Iohannis has met in New York, with his Turkmen counterpart, Gurbanguli Berdamuhamedov, on the sidelines of the UN General Assembly. According to the Presidential Administration in Bucharest, the two presidents underlined the interest they take in further boosting bilateral relations and in capitalising on the economic cooperation potential more efficiently, especially in such domains as energy, infrastructure and agriculture. In this context, the two officials mentioned the importance of implementing a joint project aimed at setting up a freight transport corridor from the Black-Sea to the Caspian Sea. They have also expressed their wish to cooperate more actively within the framework of the EU Strategy for Central Asia.



    FINANCIAL — Romania’s agreement with the IMF, which was blocked in mid 2014, expired on Saturday, with experts saying we will soon have a clear image of the future evolution and direction of the relations between the two sides. A revision of the current 4 billion Euro agreement with the international creditors has been blocked since June 2014, in the lack of an agreement on the Romanian Government’s fiscal plans. In the first part of the year, the Romanian authorities tried to adopt a complex package of tax reductions included in the new Fiscal Code, but the representatives of the international financial institutions, as well as those of the Fiscal Council and the National Bank of Romania have been critical of such an approach. This month, finance minister Eugen Teodorovici, has made public Romania’s intention to start talks with its international creditors to reach a new assistance agreement, to take effect in 2016. In his opinion, the agreement is needed to protect Romania’s finances from fluctuations and shocks on the market.



    MIGRATION — Romania is currently under no migration pressure, and the Romanian authorities have taken all necessary measures to maintain national safety and security, Romanian deputy prime minister and interior minister, Gabriel Oprea said on Saturday. As regards the refugee crisis, he underlined that Romania pledged to take in some 1,785 people and voted alongside Slovakia, the Czech Republic and Hungary, against the introduction of mandatory refugee quotas, by means of which Brussels directs some more 2,475 migrants to Romania. Gabriel Oprea recalled that 6 refugee reception centres are functioning in Romania, alongside two newly laid out camps in Timis County, (in the south-west, near Romania’s border with Hungary and Serbia, respectively).



    REFUGEE CRISIS — New laws to manage the increasing number of asylum seekers in Germany might take effect on November the 1st, said Peter Altmaier, Chief of Staff of the Federal Chancellery in Angela Merkel’s cabinet. The measures, which will include additional financial support as well as stricter rules for asylum seekers in Germany, have been agreed upon during a meeting between the German chancellor and the heads of government of most German states. Germany expects between 800,000 and one million asylum seekers to be registered this year, a record high for this country and for Europe, in general. A conference on the refugee crisis focussing on the Western Balkans and Eastern Mediterranean route that the migrants follow on their way to Europe, will be held in Luxembourg, on October 8. Attending the conference will be foreign and interior ministers of the member states, Turkey and the Balkan states. Since the start of the year, some 500,000 migrants from the Middle East and North Africa fled war and poverty in their native countries and headed for the EU.



    RUGBY — Romania’s national rugby team will face Ireland in London on Sunday, in a second Pool D game of the Rugby World Cup 2015. In the debut match played on Wednesday, Romania was defeated by the vice-champion, France, 38-11. Playing in Pool D are also Italy and Canada. Dubbed the Oak Leaf Knights, the Romanian rugby players participated in all the seven editions of the World Cup, but they never went past the group stage.



    DANCESPORT — Between September 25 and 27, the central Romanian town of Sibiu is hosting the Transylvanian Grand Prix, the most important dancesport competition of the year in Romania, which enjoys the participation of over 1,500 dancers from 25 countries. The competition is structured on age categories, from 6 year olds to professionals. 20 pairs are taking part in the World Open Competition destined for professionals, all of them being included on the Top 50-World Ranking List. Dancing on Sunday, the last day of the Transylvanian Grand Prix, will be, among others, the Show Dance world champions, Romanians Roman Ciflicli and Mirona Gliga. The pair has recently won the world title in Chengdu, China.

  • September 26, 2015

    September 26, 2015

    VISIT — Romania’s President Klaus Iohannis, who is currently on an official visit to the US, is due to meet with representatives of the Romanian community in New York, have talks with his Chinese counterpart, Xi Jinping, and attend the dinner offered by Japan’s Prime Minister, Shinzo Abe. On Friday, he attended the opening of the UN Summit, which adopted an ambitious plan of sustainable development for the following 15 years, whose annual estimated costs stand at thousands of billions of dollars. Klaus Iohannis has also had talks with the President of the UN General Assembly, Mogens Lykketoft. The agenda of the Romanian President’s visit, which comes to a close on September 29, also includes talks with US Vice-President Joe Biden, on the refugee crisis Europe is facing and the fight against terrorism.



    COOPERATION — Romania’s president Klaus Iohannis has met in New York, with his Turkmen counterpart, Gurbanguli Berdamuhamedov, on the sidelines of the UN General Assembly. According to the Presidential Administration in Bucharest, the two presidents underlined the interest they take in further boosting bilateral relations and in capitalising on the economic cooperation potential more efficiently, especially in such domains as energy, infrastructure and agriculture. In this context, the two officials mentioned the importance of implementing a joint project aimed at setting up a freight transport corridor from the Black-Sea to the Caspian Sea. They have also expressed their wish to cooperate more actively within the framework of the EU Strategy for Central Asia.



    FINANCIAL — Romania’s agreement with the IMF, which was blocked in mid 2014, expires today, with experts saying we will soon have a clear image of the future evolution and direction of the relations between the two sides. A revision of the current 4 billion Euro agreement with the international creditors has been blocked since June 2014, in the lack of an agreement on the Romanian Government’s fiscal plans. In the first part of the year, the Romanian authorities tried to adopt a complex package of tax reductions included in the new Fiscal Code, but the representatives of the international financial institutions, as well as those of the Fiscal Council and the National Bank of Romania have been critical of such an approach. This month, finance minister Eugen Teodorovici, has made public Romania’s intention to start talks with its international creditors to reach a new assistance agreement, to take effect in 2016. In his opinion, the agreement is needed to protect Romania’s finances from fluctuations and shocks on the market.



    REFUGEE CRISIS — New laws to manage the increasing number of asylum seekers in Germany might take effect on November the 1st, said Peter Altmaier, Chief of Staff of the Federal Chancellery in Angela Merkel’s cabinet. The measures, which will include additional financial support as well as stricter rules for asylum seekers in Germany, have been agreed upon during a meeting between the German chancellor and the heads of government of most German states. Germany expects between 800,000 and one million asylum seekers to be registered this year, a record high for this country and for Europe, in general. A conference on the refugee crisis focussing on the Western Balkans and Eastern Mediterranean route that the migrants follow on their way to Europe, will be held in Luxembourg, on October 8. Attending the conference will be foreign and interior ministers of the member states, Turkey and the Balkan states. Since the start of the year, some 500,000 migrants from the Middle East and North Africa fled war and poverty in their native countries and headed for the EU.



    TENNIS — Romanian tennis player Irina Begu, on Saturday qualified for the finals of the WTA tennis tournament in Seoul with 426,750 US dollars in prize money up for grabs, after she defeated Belgian Alison van Uytvanck 6-0, 6-2. First seeded Irina Begu, will be facing in the finals of the competition Belarusian Aliaksandra Sasnovich. The qualification to the Seoul tennis tournament finals is the best result scored by Begu this year.



    DANCESPORT — Between September 25 and 27, the central Romanian town of Sibiu is hosting the Transylvanian Grand Prix, the most important dancesport competition of the year in Romania, which enjoys the participation of over 1,500 dancers from 25 countries. The competition is structured on age categories, from 6 year olds to professionals. 20 pairs are taking part in the World Open Competition destined for professionals, all of them being included on the Top 50-World Ranking List. Dancing on Sunday, the last day of the Transylvanian Grand Prix, will be, among others, the Show Dance world champions, Romanians Roman Ciflicli and Mirona Gliga. The pair has recently won the world title in Chengdu, China.

  • September 4, 2015

    September 4, 2015

    The President of Romania, Klaus Iohannis, has today sent a letter to the heads of the Senate and Chamber of Deputies, announcing that he intends to address Parliament on September 16. The head of state last gave an address in Parliament on June 22, when he presented Romanias National Defence Strategy for 2015 – 2019. Subsequently endorsed by the two chambers of Parliament, the Defence Strategy brings forth the new concept of broadened security.



    The Romanian Foreign Minister Bogdan Aurescu is taking part on Friday and Saturday in Luxemburg in an informal meeting of the EU foreign ministers. According to the Romanian Foreign Ministry, talks will focus on topics like the EU eastern border, particularly the recent developments in Ukraine and the relations with the Russian Federation, the Middle East peace process, relations with Iran and the immigrant crisis. Special attention will be paid to the stage of the reform process in the countries on the east of the EU, particularly the Republic of Moldova, Georgia and Ukraine, the security situation in east Ukraine and the measures required for the immediate implementation of the Minsk agreements.



    In the neighbouring Republic of Moldova the multi-national military exercise Fire Shield has begun, with 26 troops from Romania and 150 from the USA taking part. The exercise marks 24 years since the formation of the National Army of Moldova, shortly after Chisinau proclaimed its independence from Moscow, on August 27, 1991. Also these days, more than 100 Moldovan military are taking part in the Sea Breeze-2015 drills, taking place in Ukraine under the NATO aegis. According to the Constitution, the Republic of Moldova is a neutral state, but it has been cooperating with NATO since 1994. The capital city Chisinau hosts an Alliance intelligence centre, and Moldovan troops took part in the post-conflict reconstruction operation in Iraq between 2003 and 2008.



    Bucharest may sign a new assistance agreement with the International Monetary Fund and the European Union in 2016, to protect its economy against market shocks, the Finance Minister Eugen Teodorovici told Bloomberg. According to him, Romania stands on its own and does not need IMF funding, but a flexible deal would be a good idea, as a safety net against market instability. Since the start of the economic crisis in 2009 to date, Romania has signed 3 consecutive loan agreements with the IMF and the EU, which served as an anchor for the governmental policies related to the budget, the privatisation of state-owned companies and the economy, Bloomberg notes. The current agreement with the IMF amounts to 2 billion euros, but so far Bucharest has not used these funds.



    Romanias national football team is playing tonight away from home against neighbouring Hungary, in the European Championship qualifiers. This will be followed on Monday by a game in Bucharest against Greece. With four wins and two draws in six games, Romania tops the qualifying Group F, with 14 points, followed by Northern Ireland with 13, and Hungary with 11. Romanias last matches in the group stage are in October, against Faroe Islands away from home and against Finland, on home turf. Romania last took part in a European final tournament in 2008, but failed to get past the group stage. Also today, Romanias U-21 team is playing in Targu Mures against Bulgaria, in the qualifiers of the 2017 European Youth Championship. On Tuesday, in Yerevan, the young Romanian footballers will take on Armenia, which they defeated 3-0 in March on home turf.



    Also in sports, Romanias national rugby team plays against Tonga in Bucharest on Saturday, in the last test before leaving for England for the World Cup due to begin on September 18. Romania is part of the competitions Group D, alongside France, Ireland, Canada and Italy. The Romanian rugby team has taken part in all the World Cup final tournaments so far, but they never got past the group stage.

  • Waiting for the Referendum in Greece

    Waiting for the Referendum in Greece

    On Wednesday
    morning, there were signs that a rescuing compromise for Greece was a possible
    scenario. The government in Athens would have accepted, with some amendments,
    the agreement proposal drafted by the international creditors and even
    displayed some willingness to drop the
    referendum. Everything fell apart, however, in the afternoon, when the Greek
    Prime Minister Alexis Tsipras announced that Sunday’s referendum would be held
    as planned. Moreover, he called on his co-nationals to say ‘no’ to the program
    proposed by the creditors. As a result of that, communication between Athens
    and Brussels was cut and chances of it being resumed on Monday depends on the
    outcome of Sunday’s referendum. European leaders have warned that a
    predominantly ‘no’ would translate into exiting the Eurozone, but this is an
    interpretation that Tsipras vehemently rejects.

    The head of the conservative
    opposition, the former Prime Minister Antonis Samaras, has called on the Greek
    citizens to say ‘yes for Europe’. Citizens’ sense of responsibility should
    prevail over that of the Government, said Samaras, who believes that Greece is
    now in the most critical situation of
    the past decades. The Greek crisis is carefully observed in Bucharest
    too. The Governor of the National Bank of Romania, Mugur Isarescu, has again
    called for calm and wisdom, and has urged those who have deposits in banks with
    Greek capital in Romania to refrain from acting on emotional impulse and withdraw their deposits. He has explained
    that all these banks are safe, well capitalized and subject to the Central
    Bank’s regulations, not to Greece’s decision. And, in case panic strikes, the
    Central Bank is ready to intervene. Mugur Isarescu:


    The
    National Bank has adopted measures that will ensure liquidities even in those
    situations in which, because of some emotional reasons generated by rumors or
    overreaction, the banks would find it hard to get liquidities in the market,
    despite their situation being a good one. Banks can secure liquidity, then
    can get liquid assets from the National Bank, the interest rate is low and the
    only ones who would lose in such a situation are the depositors. They would
    waste time, would lose interests, as small as it may be, and also they would
    lose money in the form of withdrawal commissions.


    On the
    other hand, even if the situations of the two countries cannot be compared – as Greece is on the brink of financial
    collapse and Romania stands on a strong financial and banking ground – the Greek crisis is food for some serious
    reflection on the relationship with partners such as the IMF and the EU. Mugur
    Isarescu:


    The
    insecure financial background on the one hand, dominated by the situation in
    Greece and in the Eurozone in general, and the domestic context on the other,
    are evidence that the agreements with our international partners, the IMF and the EU, must be maintained, in
    various forms. I believe that negotiations will continue, and it’s good that
    they will, because this is a matter of credibility.


    Just like the IMF and the European
    Commission, Mugur Isarescu does not believe that there is enough economic
    evidence to justify the fiscal relaxation initiated by the government, which is
    a bone of contention between the
    Romanian executive and the international financial institutions.

  • Romania has a brand new Fiscal Code

    Romania has a brand new Fiscal Code

    Romania urgently needed a new Fiscal Code, after the 2003 law was amended tens of times, forcing companies to change their business strategies with each and every amendment. The successive changes and the delays in publishing the secondary legislation generated the widespread perception that the principle of fiscal stability is breached in Romania, and discouraged foreign investors. Viewed by business operators and social actors as hard to enforce, the Romanian fiscal legislation had to be replaced altogether. On Monday the Senate of Romania endorsed the new Fiscal Code bill, which, says the Finance Minister Eugen Teodorovici, is primarily designed to simplify taxation.



    Eugen Teodorovici: “Clarity and accessibility in enforcing the Code provisions, transparency in presenting fiscal principles, enhancing the efficiency of managing taxes, duties and social contributions. These measures are likely to make an essential contribution to reducing tax evasion, to boosting consumption and encouraging economic growth.”



    Some of the most important provisions in the new Fiscal Code are the VAT reduction from 24 to 20% as of January 1st, 2016 for all goods and services, and to 9% for foodstuffs as of this June, the reduction of fuel and alcohol excises as of next year, the scrapping of special building taxes and of the 16% tax on dividends, as well as the lowering of the flat tax rate from 16 to 14% starting January 2019.


    Although the new Code was described as ultra-Liberal, the Liberals in opposition criticised it as unrealistic, and claimed some excessive taxes were preserved under a different name. Previously, the President of Romania Klaus Iohannis had also said he had doubts regarding some of the tax reductions, the management of which the Government had failed to explain. Indeed, the fiscal relaxation measures will reduce state budget revenues by over 37 billion lei in four years, but according to Government estimates half of the amount would be offset by the overall positive impact on the economy.



    In turn, the IMF said the tax cuts should be carefully analysed, so that they should not give rise to a budget deficit that would be hard to make up for. Romania’s current loan agreement with the Fund expires in September, but the Government said they would not ask for an IMF official opinion on the Code, because its provisions take effect in 2016, when Romania will probably not need a new agreement.


  • The Week in Review, 13-19 April

    The Week in Review, 13-19 April

    The International Monetary Fund has revised upwards its initial predictions about Romania’s economic growth rate


    The Romanian economy will grow at a faster pace this year than initially predicted, says the International Monetary Fund in its latest report. The Fund has revised its forecast about Romania’s GDP in 2015 up by 0.3%, to 2.7%. In 2016, the IMF now expects a 2.9% growth rate, compared with its previous 2.5% put forward in October last year. The main factor underlying this growth is the consolidation of private consumption amid a strong increase in real wages, low oil prices and record-low interest rates. Standard & Poor’s rating agency estimates that Romania’s economy will grow by 3% on average every year between 2015 and 2018. The agency affirmed its long and short term local and hard currency BBB-/A-3 ratings for Romania with a stable outlook.



    The European Parliament held a hearing on the Cooperation and Verification Mechanism with regard to Romania and Bulgaria


    The European Parliament’s Committee on Budgets on Tuesday heard a series of Romanian and Bulgarian officials on the Cooperation and Verification Mechanism applied to the two states when they joined the European Union in 2007. The hearing was held at the request of Romania, who believes its success in combating corruption should be acknowledged and a clear timetable should be set for entering the passport-free Schengen area. The chief prosecutor of the National Anticorruption Directorate Laura Codruta Kovesi said the monitoring mechanism played an essential role in the reform of the judiciary and the fight against corruption in Romania. She reiterated that the latter should not be subject to political interference and said the state should ensure the necessary instruments to combat corruption. “The fight against high-level corruption in Romania is impressive”, said the Secretary General of the European Commission, Catherine Day during the European Parliament hearing. She said Romania must continue to consolidate the results obtained, especially in fighting corruption at lower levels. In another development, the Clean Romania Coalition and the Academic Society in Romania have published a Map of Local Corruption in Romania indicating the country’s most corrupt regions. Bucharest is the most corrupt area in Romania, followed by the counties of Maramures, in the north-west and Bacau, in the east, while the least corrupt counties are Salaj, in the north-west, Mehedinti and Teleorman, both in the south, and Botosani, in the north-east. The map is based on the figures released by the National Anticorruption Directorate in the last five years. The survey also shows that mayors are the public officials most vulnerable to corruption.



    The state of infrastructure in Romania


    EU Commissioner for Regional Policy Corina Cretu visited Romania, where together with Transport Minister Ioan Rus she visited a segment of the Sebes-Turda motorway, a priority project for the European Commission. The project is part of the Trans-European Transport Network TEN-T which the Commission finances. The motorway is to be completed by mid-2016 and will connect the Transylvania motorway, in the centre, to the European Corridor IV that runs all the way to the Black Sea. Additionally, the Pitesti-Sibiu motorway segment has become a top priority of Romania’s transport strategy, the European Commission notes. The employees of the Dacia Renault car plant in Mioveni, southern Romania, have this week protested against the Government’s delay in building the motorway, which they see as potentially having negative consequences on their jobs.



    Verbal hostilities continue between Russia, NATO and Romania


    In the last few months, Moscow’s threats on European member states hosting elements of the NATO anti-ballistic shield have doubled. The latest episode in the series of harsh exchanges between Bucharest and Moscow authorities came on Thursday, when the Chief of General Staff of the Armed Forces of Russia General Valery Gerasimov warned that any state hosting elements of the shield, such as Romania and Poland, would become priority targets for Moscow. Bucharest and NATO officials were quick to respond. In a message posted on a social networking site, Prime Minister Victor Ponta dismissed the threats and criticism voiced by various officials of the Russian Federation, arguing that they do not intimidate Romanian authorities and cannot produce a change in Romania’s strategy. NATO spokesperson Oana Lungescu gave assurances that the Alliance’s anti-missile shield does not target Russia.



    NATO military drills in Romania


    In the current regional security context, Romania is hosting two important multi-national military drills conducted by NATO. In the southeast, over 2,200 military and equipment from Romania, the United States, the United Kingdom and the Republic of Molodva are involved in the Wind Spring 2015 military drill, which will end on April 30. Wind Spring seeks to bring stability and security in the region, considering the tense security climate in NATO’s eastern flank. In Campia Turzii, north-western Romania, a joint military drill is taking place, bringing together 350 US military and some 300 Romanian military. Commander of the US Air Forces in Europe Lt. Gen. Darryl Roberson said the drill is NATO’s response to Russia, signalling the US’s concern for ensuring security in Europe as one of its top priorities.

  • April 17, 2015

    April 17, 2015

    Two major international military exercises take place in Romania, under NATO command, in the current security context in the region. In the south-east of the country Wind Spring 2015 is under way, which brings together over 2200 troops from Romania, the US, UK and the Republic of Moldova. Until April the 30th, are practicing operational planning, live fire and complex tactical situation solving. Câmpia Turzii, in the north-west, is also hosting joint military exercises involving over 350 American troops and nearly 300 Romanian military. The commander of the US unit, Lt. Gen. Darryl Roberson, said this exercise was a response from NATO allies to Russia.



    The unemployment rate in Romania last year was 6.8%, down from 7.1%, the previous year, according to data made public by the National Statistics Institute today. The employment rate among active population (15-64 years of age) was 61%. The employment rate in the 20-64 age bracket was 65.7%, which is 4.3% less than the national target laid down in the Europa 2020 Strategy. In 2014, Romania’s active population was 9.2 million people, of which 8.6 million people employed and 629 thousand unemployed.



    The Romanian Finance Minister Eugen Teodorovici has meetings in Washington today with representatives of the International Monetary Fund, the World Bank and rating agencies. Talks will focus on the measures included in the draft Fiscal Code, on the stage of budget execution and of the implementation of the measures agreed on with the international financial institutions. Minister Eugen Teodorovici is heading Romania’s delegation to the spring meeting of the IMF and World Bank, taking place between April the 16th and 19th.



    The Ministry for European Funds is today launching the 2014-2020 Operational Programme on Human Capital. The document lays down Romania’s priorities in terms of employment, especially among youth, of social inclusion and education. The goals include improving the access to a high-quality education and professional training system, boosting employment, reducing poverty by improved access to social and healthcare services. The total budget of the programme is around 5 billion euros, of which more than 4 billion euros come from European funds.



    Germany pays tribute today to the 150 victims of the Germanwings plane crash in the French Alps, nearly four weeks after the tragedy. Around 1.400 people, mostly families of the victims, the German president Joachim Gauck and Chancellor Angela Merkel are taking part in the national memorial service, France Presse reports.



    Romania is represented in the finals of the European Artistic Gymnastics Championships in Montpellier (France) by five athletes, three girls – Diana Bulimar and Laura Jurca — in the all-round event, and Andreea Munteanu, in the beam and floor events—and two boys: Marius Berbecar and Andrei Muntean, in the parallel bars event. The all-round final takes place today, and the other finals are scheduled for Saturday and Sunday. At the end of the competition in Montpellier, the president of the European Gymnastics Union will hand over the Union colours to the host of the 2017 European championships, Bucharest.

  • With or without the IMF?

    With or without the IMF?

    To a large extent, Romanian economy has managed to correct some of its internal and external imbalances, through a mix of solid macro-economic policies, but it is still vulnerable to external shocks. This is the conclusion of the international assessment mission to Bucharest, which ended on February 10th. The IMF, EC and WB experts came to Romania’s capital to assess the implementation of the 2 billion Euro precautionary stand-by agreement, valid until this autumn. So far, the Romanian authorities have not resorted to any of the funds provided for in the agreement, and that is why there are many voices saying that an extension of the accord would be pointless. The issue could be settled in April, when the lenders’ delegation plans to come back to Bucharest and when, according to the Romanian Prime Minister Victor Ponta, the parties will resume talks on the two issues that they have not managed to reach an agreement on: the increase in the price of natural gas and the restructuring of coal-based energy sectors. Victor Ponta:



    “Our international partners have appreciated the many accomplishments on Romania’s part. In 2014, the GDP went back to the level it had before the crisis, and growth is now steady. Private consumption and exports have supported this economic re-launch. It is very important for the measures that are to be taken from now on to be in the same direction, both with regard to the fiscal code, absorbing European funds, and removing red tape barriers. We have an international agreement and I want to see it carried through successfully. Yesterday we did not sign the letter of intent for two things that we first had to think through and negotiate properly, bearing in mind the interests of those who elected us to represent them. On the one hand, with regard to the price of gas for domestic consumers, we want to make sure that the increase is really necessary, given that at world level energy prices have dropped, and secondly that such an increase is bearable enough, because otherwise we will be faced with the situation in which people and companies would no longer be able to pay their bills in the winter months. Secondly, I believe that Romania needs coal-based energy. This thing about closing down coalmines and plants is an old story. We’ve been talking about closing them down since 1996. However, I don’t believe this would be a good thing. I see we need all types of energy, be it hydro, nuclear, coal or renewable, but we also need restructuring, investment in the environment and measures aimed at rendering these companies more effective.”



    Among the economic entities on the lender blacklist is Oltenia Energy Compound, which digs up low quality coal and runs thermal plants able to supply 40% of the national energy consumption. An adviser to the PM and a former minister in Social Democratic governments, Ionel Blanculescu insists on the obligation of the Social Democratic government to protect its citizens:



    “There are very clear arguments. The IMF must understand that the 26,000 employees on the horizontal of the economy, which ensure 40 to 50,000 more in the state sector, cannot just be sent home overnight, you cannot shut down these entities overnight. You have to provide what the premier suggested, a rational program of restructuring and efficiency boosting, with a better management of those institutions, which may be a solution in time. At the same time, the second element in this dissent is the price of natural gas, especially for home users and gas heating plants. In this area I think that rushing things will do more harm than good, and I don’t think it should be that way, especially as world prices have fallen severely. Romania should not rush and totally change its trends in terms of the rise in these prices. After all, Romania’s population should enjoy for a time, as long as it lasts, this trend of drop in prices for gas, crude and oil products.”



    Economic analyst Radu Soviani believes that we should expect two months of insecurity before the parties sort out the dilemma of prolonging or not the IMF accord for Romania.



    “From my point of view, the fact that there is no IMF letter stating that Romania has lived by the obligations it took upon itself is a form of uncertainty for the upcoming period. What does that uncertainty mean? It means that at this point the IMF does not have the certainty of negative facts, which is why the de facto agreement is not declared failed, even though it has failed, and at the same time, for the Government of Romania, it means that it does not have the certainty of positive facts. Hence, we will have to wait until April, and in April we will see where the unknowns lie.”



    The head of the Tax Council, Ionut Dumitru, says that the opinions expressed by the IMF experts on energy compounds reveal a wider problem, which has been affecting for a long time the economic development of the country: the inefficiency of state capital companies. In the name of the Liberal opposition, former finance minister Gheorghe Ialomitianu said he was convinced that the lack of a letter of intent is proof that ‘the present government did none of the things it committed to doing.”


  • Conclusions of the IMF mission to Romania

    Conclusions of the IMF mission to Romania

    In recent years, struggling with the effects of the financial crisis, Romania’s external lenders, the IMF, the World Bank and the European Commission, have weighed in on decision-making in Bucharest, particularly in terms of reform. Many pundits claim that if Romania hadn’t committed to implementing certain reforms under its agreement with international lenders, many of those measures, although unpopular, wouldn’t have materialized. Still there were times when negotiations between the two parties didn’t run so smoothly. That is also the case of the troika’s recent assessment mission to Bucharest, which came to an end this Tuesday. No consensus was reached, for the time being at least, on the liberalization of gas prices and on the privatization of certain energy companies, two measures the IMF is adamant about but which the left-of-centre Government refuses to accept. Prime Minister Victor Ponta claims the liberalization would entail a hike in gas prices, for both home and industrial users.



    “The request of the European Commission and the IMF refers to an increase in gas prices starting April 1, from 53.3 lei per megawatt to 62 lei per megawatt, which we see as unsustainable. The second point on which we failed to reach an agreement was the privatization of Hunedoara and Oltenia state-owned companies, which the troika wants us to restructure. In our view, that would not help save the coal energy industry and the jobs in that sector. On the contrary, those measures will in the long term cause that sector to shrink radically in a few years’ time”.



    In the absence of a clear-cut consensus, the IMF did not submit its usual letter of intent. Talks between Romania and its lenders are due to resume in April. Viorel Stefan, the president of the Budget and Finance Committee of the Chamber of Deputies explains.



    “The agreement still stands. The fact that there is no letter of intent signals a temporary suspension of the agreement, while Government experts and representatives of lending institutions would reach consensus over any pending issues”.



    The Liberals in opposition see the negotiations as a failure. Liberal MP Gheorghe Ialomitianu, a former Finance Minister:



    “The IMF believes the current Government did nothing to abide by its commitments, the Government on the other hand claims everything is fine. We therefore find ourselves in a deadlock. This delicate and uncertain situation is also a matter of concern for the business sector”.



    Romania’s current standby agreement with the IMF is worth 2 billion Euros, money the authorities may access in case of emergency.

  • International Finances and Personal Insolvency

    International Finances and Personal Insolvency

    A joint mission of the International Monetary Fund, the European Commission and the World Bank has come to Romania for their third assessment of the 4-billion euro precautionary loan agreement, signed with Bucharest in 2013. Until February 10th the international experts will discuss with representatives of the Government, the Central Bank, business people and trade unions about the recent economic developments and the reform priorities.



    According to economic analysts, issues like a revised calendar for the listing of state-owned companies, the stage of the privatization process and a fiscal code that should stay unchanged for the following five years are also to be discussed.



    High on the meeting’s agenda is the impact of the soaring Swiss franc on the financial sector and the Romanian National Bank’s policy, as well as the recent decision of the European Central Bank to initiate an extensive quantitative easing scheme. The international lenders’ visit to Bucharest takes place against the background of efforts by the Romanian Government, Parliament, National Bank, commercial banks and people with Swiss franc loans to find solutions to the crisis generated by the Swiss currency’s historic appreciation against the Romanian leu. The over 75 thousand Romanians who have contracted loans in this currency, have found out their rates are now about 20% higher.



    Before coming to Bucharest, the IMF, European Commission and World Bank experts have voiced concern, in a letter sent to the Romanian authorities and the National Bank of Romania, at the possible conversion of hard currency loans into national currency loans, against the currency exchange rate at the time when the loans were contracted. This measure might affect the financial system’s stability, the international lenders have warned. They have also pointed out that the personal insolvency law, discussed these days in Parliament, needs to be preceded by impact studies, consultations with all parties involved and the assistance of other EU states where similar laws are in force.



    Romanian lawmakers want this bill adopted as soon as possible, for fear that people’s defaulting on their loans might turn into a social problem. Economic analysts however, say this is not the first time when IMF representatives are coming to support the banks and postpone the adoption of this bill. The first draft law on personal insolvency was tabled in 2010.

  • From International Lenders to European Funds

    From International Lenders to European Funds

    After consultations with government and opposition leaders, with bankers and with businessmen, the IMF, EC and World Bank assessment mission ended without a new letter of intent being signed. The international experts and the government failed to reach an agreement on the 5% reduction of social security contributions, which the Ponta Cabinet intends to implement as of October the 1st.



    PM Ponta says the budget has enough resources for this and the measure will not require new tax increases or the widening of the budget deficit. The PM insisted that the current stand-by loan agreement remains valid, but will not be renewed, as Romania does not intend to access these funds anyway. Economic analyst Aurelian Dochia is rather cautious:



    Aurelian Dochia: “Without further agreements with the IMF, we may wonder about the economic policies that the government will implement, in the absence of the constraints usually imposed by the Fund. Our experience so far suggests there are certain risks in this respect. On the other hand, I think eventually we must move on from this stage and be able to stand on our own feet.”



    Political analysts are even more suspicious of such populist measures being taken in an election year. But the Cabinet is quick to retort, and says Romania will have plenty of resources, because its agreement with the EC on the allotment of new EU funds will be signed by the end of the year. According to Minister Eugen Teodorovici, by end-2015 as much as 80% of the budget earmarked to Romania for 2007-2014 will have been spent.

  • June 13, 2014 UPDATE

    June 13, 2014 UPDATE

    INTERNATIONAL FINANCIAL MISSION– Talks between a joint delegation of Romania’s international lenders and the local authorities have been constructive, although a series of issues remain pending, an IMF communiqué shows. High on the agenda was the government’s intention to introduce a 5% reduction in employer social security contributions. The measure didn’t get the lenders’ approval but the agreement Romania has signed with the IMF, the World Bank and the European Commission remains operational, Prime Minister Victor Ponta has said. The Romanian official has also announced the government’s intention to reduce social security contributions as of October the 1st and has given assurances that Romania will respect all macroeconomic targets agreed upon with the international lenders.



    ECONOMY-Romania stands high changes of passing from the status of frontier market to the status of emerging market in the following 12-18 months, the President of the Asset and Fund Managers’ Association, Dragos Neacsu said on Friday. Representatives of the funds-managing industry claim there are several favourable indicators for Romania to get this status, among which a budget deficit below the 3% EU standard, one of the lowest indebtedness levels in the EU, of approximately 40%. To all this, we should add the recent improvement of Romania’s country rating by Standard&Poors.



    EDUCATION– Romanian education minister, Mihnea Costoiu, who is on a visit to the US until June the 16th, has met with members of Congress. The focal points of the talks covered such issues as ways to boost bilateral cooperation in the field of education and research. The Romanian side has provided details on the most important initiatives in the field of research, such as the ELI-NP project in Magurele and the Danube- Danube Delta- Black Sea project. The Romanian minister has visited the NASA headquarters, where he held talks with the director of NASAs Goddard Space Flight Center, Christopher J. Scolese.



    VISIT– The European Commission President, Jose Manuel Barroso is currently on a visit to Azerbaijan, the last leg of a tour of three Eastern Partnership states, which also included the Republic of Moldova, a former Soviet country with a Romanian speaking majority, and Georgia. We recall the two countries, the Republic of Moldova and Georgia, are to sign, on June 27th, the Association and Free Trade Agreements with the European Union, which they initialled at the Eastern Partnership Summit in Vilnius. In Chisinau, President Barroso signed four agreements under which the Republic of Moldova will benefit from 50 million euros in financial assistance in order to implement reforms. Jose Manuel Barroso is at his third mandate as head of the European Commission, which is due to end this year on October 31st.



    UKRAINE-Ukrainian armoured vehicles crossed the border with Russia and have been intercepted by the border police, the Kremlin spokesperson Dmitri Peskov said on Friday. According to him, Russian President Vladimir Putin has demanded explanations from Kiev about this incident. On Thursday, Ukrainian President Petro Poroshenko denounced an alleged incursion by Russian tanks into Ukraine. The US and NATO have said that if the information provided by Kiev is confirmed, they will consider this an esclation of the conflict. In another move, Ukrainian Prime Minister Arseniy Yatseniuk has called on decision-makers in the energy sector to make ready for a cessation of Russian gas deliveries as of Monday, the deadline set by the Russian giant Gazprom for the payment of the debt accumulated by Kiev. The request has been made after negotiations between Kiev and Moscow on the price of natural gas deliveries ended in a failure. Gazprom, the largest natural gas world producer, provides a third of Europe’s natural gas needs. Half of this amount crosses Ukraine.



    IRAQ-US President Barack Obama on Friday said he does not intend to send ground troops to Iraq, to counteract an offensive carried out by Sunni extremists, but he will be considering, in the coming days, several options to help the Iraqi security forces face the insurgents. Obama has however underlined that any military action will end up in a failure if the Iraqi leaders do not make a political effort. Also on Friday, Ayatollah Ali Al-Sistani, the highest Shiite religious authority in Iraq called on the population to fight Sunni insurgents who have recently conquered territories in the north and east of the country, killing hundreds of people. Jihad fighters continue to advance on Baghdad, after conquering several provinces. In recent days, by carrying out a flash-offensive, they have advanced from the northeast of the country towards the centre, coming closer to reaching their objective of setting up an Islamic state in the region. The Kurds have also taken advantage of the newly created situation, taking control of some abandoned military positions in the province of Kirkuk, which is rich in oil, a region that- according to them-should have long become part of their autonomous region.



    NEW EU DIRECTIVE-All products purchased online or from shops should be returned within 14 days, according to a new EU Directive on Consumers’ Rights, which took effect on Friday. The whole set of regulations stipulated by the new Directive will be enforced all over the EU, Romania included. The European Commission has also published an implementation guide, to be used by the member states.



    SPORTS– Romanian women’s sabre team on Thursday walked away with gold from the European fencing championship held in Strasbourg, France, following the finals they won against Russia, 38-34. The Romanian side made up of Ana-Maria Branza, Simona Pop, Maria Udrea and Simona Gherman, who also got bronze in the individual event, have defeated Ukraine in the quarters and Italy in the semis. Romania lost the finals of last year’s championship in Zagreb to Estonia.