% of GDP
a free service
Soviet occupation following World War II led to the formation of a communist "peoples republic" in 1947 and the abdication of the king. The decades-long rule of President Nicolae CEAUSESCU became increasingly draconian through the 1980s. He was overthrown and executed in late 1989. Former communists dominated the government until 1996 when they were swept from power. Much economic restructuring remains to be carried out before Romania can achieve its hope of joining the
Update No: 067 - (19/11/02)
The Romanians are generally dissatisfied with their lot. A poll made by IMAS Poll Institute, during October 11-17, reported that more than 66% of the citizens are displeased with the current economic situation, 28.2% very much so and 42% not quite so much.
This is hardly surprising in a country with a poor record of late, coming out of a disastrous communist regime, that of the notorious Ceaucescu couple.
Things were not always so bleak. Before the Second World War Romania was a leading oil-producing country, as it is no longer. Bucharest was one of the architectural jewels of Europe. But as a prescient intellectual at the time said: "one day this nation will be ruled by a cobbler and then it will go to the dogs."
Ceaucescu was the son of a cobbler and certainly had a vision befitting one of low station. He conspicuously lacked any aesthetic sensibility, pulling down streets of superb Baroque villas and civic buildings to put up 'brutalist' eyesores in their place, dedicated of course to the glory of his very own 'workers' paradise.
Nevertheless, a welfare state of sorts existed and rents and prices were kept low. There is therefore, a measure of nostalgia among many Romanians for the bad old days.
The disillusionment with the brash new world of market economics, initiated in the 1990s was doubtless a major reason for the population giving the ex-communists another chance after one unsuccessful spell in power in that decade, when they promised much and achieved virtually nothing, delaying the transitional pain of going to market place economics by five wasted years.
The president, Ion Iliescu, was a senior functionary under Ceaucescu, while Premier Adrian Nastase, a much younger man, was middle - ranking in the hierarchy at the time. Membership of the Communist Party of Romania was obligatory and no-one holds it against either of them. Nastase is showing signs of being a reformer and is an enthusiast for the EU and of privatisation and foreign investment.
The EU beckons
There is no doubt that the population are putting their faith in EU entry as the way forward. According to Eurobarometer, Romanians are the biggest supporters of EU membership among the peoples of the candidates' countries. Of those recently polled, 76% said that Romania would profit from accession, while 85% would vote for entry if a referendum on the issue were to be held.
The danger is that expectations may be far too high. Ireland and Portugal were two not so rich countries that have done extremely well out of EU membership; so has Greece. But none of them were as destitute or denuded of their past as Romania. It will be decades before it can hope to reach even the lowest levels of EU living standards.
But it has assets all the same, a large and well-educated work-force (Romanians are well-esteemed in the world of computer technology), a beautiful countryside with some outstanding architecture particularly outside the capital, still left even after the ravages of the Ceaucescus and a fluency in French and now English which is assisting an inward flow of foreign investment. France, Turkey, Italy and Germany are taking an interest. It is only a matter of time before Romania is put where it deserves to be on the European map.
Fitch improves Romania's ratings for long-term debts
Fitch Ratings, the international rating agency, has upgraded Romania's long-term foreign and local currency ratings to "BB-" (BB Minus) and "BB" from "B+" and "BB-" ("BB minus"), respectively, Mediafax News Agency has reported.
The short-term foreign currency rating has been affirmed at "B". The long-term rating outlook is stable, informs a release of the agency.
According to Fitch, Romania's creditworthiness has improved markedly over the last two years. It is currently enjoying its strongest macroeconomic performance since transition began and, underpinned by official financial support and improved bond market access, the National Bank's international reserves have increased to record levels. Thus, liquidity has improved and the public sector has recently become a net
Fitch is warning, however, that without the necessary reforms - a reduction in the quasi-fiscal deficit and the closure of non-viable enterprises in order to reallocate resources to more productive areas of the economy - pressure on the current account deficit could re-emerge.
In such a scenario, although Romania's improved liquidity and relatively smooth debt service profile would provide some breathing space, the risk of financing difficulties over the long term would slowly increase and confidence in the authorities' ability to maintain financial stability would fall.
Fitch has also improved, in June, the rating granted to Romania for the foreign currency long-term debt from "B" to "B+" and the rating for the national currency credits from "B+" to "BB-".
Financial evaluation international agency Standard&Poor's improved Romania's rating in April, from "B" to "B+" for the foreign currency long-term credits and from "B+" to "BB-" the rating for the national currency long-term debt.
Moody's improved, in December last year, Romania's rating for the foreign currency bonds, from B3 to B2, as well as the foreign currency deposit rating, from Caa1 to B3.
Romania to export light weapons to USA
Romania will export to the USA, by February 2003, weapons, mainly submachine guns worth US$15m within a contract which has in view the relaunch of the Romanian defence industry, which is in a serious recession, the National Authority for Control of Strategic Exports (ANCESIAC) announced on 5th November in Bucharest, Rompres News Agency has reported.
"It is about the most important transaction in the last three years," mentioned ANCESIAC, which granted the export license to the ROMARM Company. The contract stipulates delivery of light weapons and ammunition made by the factories in Cugir, Sadu and Orastie. "Romania is a traditional supplier of light weapons to the USA, where the demand for this type of armament is going up, especially after 11 September 2001," said Dan Mocanescu, president of trade unions of the Romanian defence industry...
Romanian minister, European official sign employment-related document
Romanian Minister of Labour and Social Solidarity, Marian Sarbu and European Commissioner for Employment and Social Affairs, Anna Diamantopoulou on 28th October signed a Joint Document Assessing the Political Priorities for Employment, Rompres News Agency has reported.
Minister Marian Sarbu said this document sanctions Romania's determination to meet her commitments made as part of the Chapter 13 negotiations on social policies and employment. This prompted Romania to work out a National Action Plan for Employment together with experts from Germany and Holland, to guarantee that EU guidelines are followed in Romania, Minister Sarbu added.
Commissioner Diamantopoulou said that the EU will sign similar document with Bulgaria, pointing out that such assessments will be signed by all EU candidate states. The European commissioner said this document provided legislative harmonization, a European strategy on employment and PHARE [EU fund for reconstruction in Eastern Europe] funds. Diamantopoulou said that Romania has made substantial efforts to bring its legislation in line with the EU one, but further actions should be taken to improve administration capabilities. From this point of view, the Romanian government must be helped to increase labour employment efficiency, highlighted the European commissioner. As for the European Employment Strategy, Diamantopoulou said the EU seeks to have 70 per cent of the European labour force employed by 2010. The Romanian authorities must focus on increasing the professional training of the people seeking employment, the unemployment rate (in view of economic restructuring) as well as salaries, which should be backed by economic growth and better macroeconomic indicators.
FOREIGN ECONOMIC RELATIONS
President says Romania to renew cooperation with Serbian chemical firm
Romanian President Ion Iliescu, in Yugoslavia on a two-day official visit to this country, met on 5th November in Pancevo with representatives of the Romanian community in Yugoslavia and afterwards with businessmen of the Southern Banat Region, Tanjug News Agency has reported.
During the visit, the Romanian president announced that Petrohemija of Pancevo and Solventula of Timosoara would shortly renew cooperation, primarily owing to the completion of the oil pipeline from Constanta to Pancevo.
"After all, there is the good tradition in economic relations between Romania and Yugoslavia, as well as good political relations," Iliescu said in the Regional Chamber of Commerce of Pancevo, the venue of a meeting of economic delegations of Romania and the Southern Banat Region.
The Romanian state delegation, headed by Iliescu, previously met with the representatives of the Romanian community in Yugoslavia in the Pancevo commune building.
Romania set to receive fourth IMF stand-by agreement tranche
The International Monetary Fund mission, on a visit to Romania, was due to meet Romanian Prime Minister, Adrain Nastase, to chew over the terms the country has to meet for the Fund to release the fourth tranche, which stands at US$60m, of the stand-by accord, according to Bluebull. The accord, overall worth of US$383m, was finalised in October 2001. The IMF and the government were also due to talk about the measures taken in recent weeks by the latter for pushing the privatisation process forward and boosting incomes to the state budget, Bluebull said. This was the mission's third review within the stand-by accord.
MINERALS & METALS
Domestic, foreign investors eyeing Petrotub stake
The privatisation of Romanian pipes maker, Petrotub, scheduled to begin in 2003, has drawn the interest of 14 companies, both domestic and foreign, according to Bluebull. The interested parties include; British Tubman International and Russian Celabinsk steelworks, owned by Swiss group Conares Trading. The British group bought a 70 per cent in Perotub in 1999 but the agreement was cancelled by the Competition Council a year later because Tubman International clinched a leading position on the market with a 75 per cent share. For the last three years, Tubman International has held controlling shares in Silcotub Zalau and Laminorul
Official announces completion of Romania's long-term nuclear programme
Minister-delegate for the research activity Serban Valeca announced at a news conference on 5th November, that the medium and long-term Romanian National Nuclear Programme (PNN) had been finalized, Rompres News Agency has reported.
Achieved by Romanian companies specializing in the nuclear field and under the administration of the National Agency for Atomic Energy, the programme was endorsed by the government last week. The PNN main target is expanding the weight of the nuclear-origin electricity in the overall output of Romanian electricity, achieved under competitive conditions of price and cost, with the ensurance of nuclear safety at the level of international standards. The PNN includes a part referring to the construction of units at the Cernavoda nuclear power plant and another part regarding the use of nuclear energy in industry and medicine.
Valeca said the programme will pursue the evolution of the process of electricity production until the reactors are dismantled. "A high-power reactor has a period of operation of approximately 40 years, and dismantling might take 10-15 years. It is for that reason that we needed a long-term strategy," he explained.
At present, nuclear energy accounts for 10.5 per cent of Romania's overall energy output and it is achieved by unit 1 of the Cernavoda plant. Under the programme, reactor 2 is to be completed in 2005, when the construction of reactor 3 will begin. Construction of reactors 4 and 5 is estimated to be finalized in 2015. All of them will be built by mainly private funds.
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