For current reports go to EASY FINDER




In-depth Business Intelligence

Key Economic Data 
  2002 2001 2000 Ranking(2002)
Millions of US $ 44,428 38,700 38,200 52
GNI per capita
 US $ 1,850 1,720 1,610 108
Ranking is given out of 208 nations - (data from the World Bank)

Books on Romania


Area (




Ion Iliescu

Private sector 
% of GDP 


Update No: 090 - (27/10/04)

Basescu Enters Romanian Presidential Race
The big event in Romania is the forthcoming presidential election in November. Following the withdrawal of Theodor Stolojan from the presidential campaign, the main opposition alliance has chosen the recently elected Bucharest Mayor and Democratic Party (PD) leader, Traian Basescu, to run against Prime Minister Adrian Nastase, the candidate of the ruling Social Democratic Party (PSD). The stage is set for a dramatic showdown, as Basescu is a more formidable campaigner than the man he replaced. National Liberal Party (PNL) chairman and alliance co-chairman Theodor Stolojan.
Romania's main opposition alliance on 4th October officially confirmed that Basescu would be its candidate in the November presidential campaign. The mayor of Bucharest was nominated after the withdrawal of Stolojan from the race. 
Stolojan, who was prime minister for a period during the early 1990s, cited ill health as the reason for his withdrawal. "Unfortunately, my road to the presidency ends here," Reuters quoted him as saying. "It was a tough road which left deep marks … my health problems can be remedied now, but might irremediably aggravate if I do not focus on them." 
His decision stunned the PD and PNL, which together make up the Justice and Truth Alliance, and threw the Romanian political scene into turmoil. Basescu charged that Stolojan's medical condition had been worsened by "blackmail" by the PSD. According to Basescu, PSD leaders planned to launch a smear campaign, publicising treatment Stolojan received at a sanatorium 20 years ago, as well as his alleged involvement in a questionable business deal. 
Blasting what he described as "an outrageous system that destroys the ruling party's political opponents," Basescu said the PSD aimed to use its network of party-controlled newspapers and media to destroy Stolojan's reputation. 
"Boys, you can't have me," he said, vowing that he would not be intimidated by political dirty tricks. 
Prime Minister Adrian Nastase -- who is also the ruling party's candidate for president --firmly denied the accusations, saying that he had called Stolojan following his announcement and that the two had talked for more than 15 minutes. "Stolojan did not tell me anything about any sort of blackmail," Nastase said, accusing Basescu of exploiting the PNL leader's illness for political gain. 
Analysts say the change of opposition candidates will make it harder for Nastase and his party. During local elections in June, Basescu humiliated the PSD candidate, Foreign Minister Mircea Geoana, in the mayoral race. Basescu's aggressive, populist style is seen as more likely to fire up Romanian voters than that of the reticent Stolojan, who was lagging by as many as eight points behind Nastase in the polls. 
According to Cornel Nistorescu of the daily Evenimentul Zilei, a "spectacular relaunch" of the campaign has taken place, setting the stage for a dramatic showdown.

Romania sees FDI of $2.5 billion in 2004
The Romanian economy grew 6.6 percent in the first half of 2004 over the same period last year and is forecast by the government to grow by 5 percent or more in each of the next four years.
The key to expecting long-term growth to be sustained lies in foreign direct investment(FDI). Romania expects FDI to reach $2.5 billion in 2004, the Rompres news agency reports.
Alexandru Popa, head of the Romanian Agency for Foreign Investments, was reported as saying FDI in 2004 would improve on last year's $1.8 billion because of reforms to the customs code, the taxation system and business registration procedures.
In August the central bank said increased foreign direct investment would inevitably lead to a gradual appreciation of the Romanian currency, the leu. In the January to May period, foreign direct investment inflows were up 38 percent compared to the same period last year.
Foreign direct investments (FDI) attracted by Romania could reach US$2.5bn this year, after amounting to a record US$1.1bn in the first half, up 60% compared to the corresponding period of 2003, Alexandru Popa, head of the Romanian Agency for Foreign Investments (ARIS), stated recently on the occasion of the presentation in Bucharest of the World Investment Report by UNO.
Popa stated the estimate is based, apart from the good evolution in the first half of the year, on the improvement of administrative procedures for company registration, correlation of control and check operations, establishment of the single registry, improvement of customs code and stabilisation of the taxation system after the fiscal code came into force.
"The report reveals Romania's notable progress, and it is a highly positive signal, particularly in the context of OECD entry negotiations," Popa said. According to the report, in 2003 Romania ranked fourth in Central and Eastern Europe, with a US$1.8bn FDI, whereas on the whole the region registered a steep drop in FDI, to only US$21bn (32% down since the previous year), while an important global decline was also reported.
In turn, Ruxandra Stan, executive manager of the Foreign Investment Council (FIC), stated that although there are positive prospects for Romania, many problems are still waiting to be solved.
"The FDI attracted by a country depends on three elements mainly: costs, labour skills and infrastructure. While in costs and labour qualification we are okay, there is a lot to be done as far as infrastructure is concerned," Stan explained.
The FIC official emphasised that Romania also has problems related to data security, copyright, excessive tax bureaucracy, labour code and economic control operations.
"There is what we call 'control harassment' - chaotic and too frequent controls. Furthermore, there is an overlapping of attributions of the economic police, the financial guard and other check and control bodies. We asked the ministry for public finances to draw up a code of conduct of control institutions. The ministry is currently working on an ethics code in this respect, yet what we want is a code of conduct, following the British model, which clearly defines the attributions of the control institution and officials while conducting checks," Stan added.
In her opinion, in order to attract FDI, Romania must stop betting on the 'facilities' card and look for innovative solutions, on better reasoning and better enforced, such as industrial parks, which should be further developed. Popa said that as the EU legislation is adopted, Romania will no longer be able to grant 'passive' facilities, such as the ones for underprivileged zones.

« Top


S&P raises Romania's Termoelectrica ratings

Standard & Poor's Ratings Services said recently it had raised its senior unsecured rating on the US$200m and US$120m notes issued on a fiduciary basis by J P Morgan Bank Luxembourg S.A. for S.C, Termoelectrica S.A. to BB+ from BB, New Europe reported recently. 
J P Morgan issued the notes on a fiduciary basis to fund loans made by it to Termoelectrica and 18 thermal power plants, added the rating agency. "The rating on the notes is based on the unconditional and irrevocable guarantee by the Republic of Romania of the due payment of principal and interest on the loans to the fiduciary, with the fiduciary using the proceeds of principal and interest payments from either the borrowers or guarantor to pay the notes' coupons and redemption amounts," said Standard & Poor's credit analyst Konrad Reuss. Termoelectrica is 100%-owned by the Republic of Romania (foreign currency, BB+/Stable/B) and is not slated for full privatisation in the near term.

S&P raises Romania's ratings

Romania had its foreign credit rating raised by Standard & Poor's as the government cuts the budget deficit to 1.64% of GDP this year, down from 2.5% in 2003, in preparation for joining the European Union in 2007.
S&P said recently that it lifted the ratings on Romania's US$4.9bn of foreign-currency bonds one step from BB to BB+, one level below investment grade and equal with Russia, Egypt and E1 Salvador, said Bloomberg citing a S&P statement.
The country's long-term, local-currency ratings were raised to BBB-, the lowest investment grade, added the news service. "The upgrade reflects the country's significant progress in reforming its state-owned enterprise sector, together with EU membership prospects," said Standard & Poor's credit analyst Moritz Kraemer.
"Romania's recent progress in structural reforms should lead to lasting improvements in public sector finances. Moreover, prospects for deepening parastatal reform are encouraging." Improved macroeconomic stability and microeconomic reform have increased the probability that Romania will become a member of the EU by the official target date of 2007.
The ratings remain constrained, however, by institutional weaknesses, external imbalances, and low levels of economic prosperity, although there would be a gradual catch-up with investment-grade sovereigns if the government follows through on the current reform agenda. "Romania's improved prospects for becoming a member of the EU by 2007 are balanced with its external vulnerabilities," said Kraemer.
"EU membership would make the economic modernisation process irreversible."
A sustained commitment to fiscal consolidation and microeconomic reform by the government that emerges from the November 2004 elections could lead to an upgrade of the foreign currency ratings to investment grade in the medium term. A delay to EU membership into 2008 would not in itself put any downward pressure on the ratings on Romania. Nevertheless, further weakening of the current account balance and the concomitant effects on external debt and liquidity could lead to a lowering of Romania's credit rating, especially if net foreign direct investment were to fall short of expectations, noted the rating agency.
Romania sold state assets such as oil company SNP Petrom SA and two of its eight power distribution companies to satisfy EU budget demands. Inflation dropped to 12.4% in August from almost 15% a year ago.
Government elections in November are unlikely to stall EU entry talks, Bloomberg quoted Simon Quijano-Evans, an analyst at Bank Austria Creditanstalt AG in Vienna, as saying. "Any new government will clearly set itself the target of completing talks" to join the EU, Quijano-Evans said in an e-mail on August 17th, predicting an upgrade.
"The external financing picture now looks more benign." The extra yield, or spread, investors demand to hold Romanian government bonds rather than benchmark European government debt tumbled to as little as 1 percentage point this year from 4.8 percentage points in 2002. Romania concluded talks with the EU on 25 policy areas out of a total of 31 required from all candidates, and wants to finish talks by the end of the year. The European Commission will re-assess progress in October, added the news service.

Fitch changes BRD's and UCR's ratings outlooks

Fitch Ratings, the international ratings agency, said recently that it has revised the rating Outlooks on BRD - Groupe Societe Generale (BRD) and UniCredit Romania (UCR) to Positive from Stable, New Europe reported recently. At the same time, BRD's and UCR's ratings are affirmed at Long-term BB, Short-term B and Support 3.
UCR's Individual rating is affirmed at D. The new Outlook follows the recent change in the Outlook on Romania's Long-term foreign currency BB rating to Positive from Stable, noted the agency.
The Long-term, Short-term and Support ratings of BRD and UCR are derived from the potential support from their foreign parents in case of need. BRD is 51% -owned by Societe Generale, (rated Long-term AA-).
However, due to the potential transfer risk in Romania, which could constrain the ability of these institutions to support their subsidiaries, BRD's and UCR's Long-term ratings are constrained by Romania's country ceiling of BB, noted the rating agency. BRD is Romania's second largest bank, accounting for 16% of total banking assets, and has been majority-owned by Societe Generale since 1999.
UCR was a relatively small bank when UniCredito Italiano initially took a stake in it in June 2002.
The bank has since undertaken a successful expansion strategy targeting both corporate and retail clients. Recently, Fitch upgraded Romania's Banca Comerciala Ion Tiriac S.A.'s (Banca Tiriac) Long-term rating to B+ from B. At the same time, the bank's other ratings are affirmed at Short-term B, Individual D and Support 5. The Outlook for the Long-term rating is Stable. The upgrade reflects Banca Tiriac's high and improving profitability.

« Top


2004 wine production set to rise

This year's Romanian wine production is forecast to rise from last year, reported recently. 
For 2004, the estimated total wine-grape production is 927,253 tons from 178,458 hectares of producing vineyards, according to the National Inter Professional Viticultural Organisation (ONIV). The average grape yield is expected to be 5.196 kg/ha. Wine production this year will increase by 15% compared to last year, up to 5.5m hectolitres, but due to the wet summer, the ripening of the grapes will be delayed by between two and three weeks depending upon the region, ONIV said. The total vineyard area in Romania is 240,000 hectares, ranking the country ninth in the world. For the total area of vineyards, 188,700 hectares represent the surface of vine plantations, the rest is either in preparation for planting or must be reconverted, ONOV added.

« Top


WB grants 123m Euro loan to Romania

The World Bank (WB) will give Romania an 123.4m Euro (US$150m) loan to finance the process of further reforming the legal system, the administration, the energy sector and the public finance sector, Anand Seth, World Bank director for Central and Southern Europe, New Europe reported.
Romanian Finance Minister, Nihai Tabasescu, and Seth recently signed documents confirming the loan, which is a component of the Programmatic Adjustment Loan - PAL 1 - designed to support structural reform. Witnessing the said document signing, Premier Adrian Nastase, remarked that PAL 1 was the first of three loans to be granted to Romania as reform support.
He said he believed that the successful completion of PSAL I and PSAL II, as well as the ongoing implementation of PAL 1, constituted substantial support for Romania's efforts to be acknowledged as a functioning market economy. Seth said the povery rate had decreased in Romania, but was still higher than desirable and that although structural reform had been commenced with determination, tough measures were strill needed to complete the process. He added that the judiciary was another sector that still required close attention.

« Top



Our analysts and editorial staff have many years experience in analysing and reporting events in these nations. This knowledge is available in the form of geopolitical and/or economic country reports on any individual or grouping of countries. Such reports may be bespoke to the specification of clients or by access to one of our existing specialised reports. 
For further information email:

« Back


Published by 
International Industrial Information Ltd.
PO Box 12 Monmouth 
United Kingdom NP25 3UW 
Fax: UK +44 (0)1600 890774