Books on Romania
% of GDP
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: 085 - (01/06/04)
The Romanians have taken a momentous step. They will enter the Euroland ahead of entering the EU.
Entry into the EU is a difficult business. The Visegrad four and the Baltic three, plus Slovenia, have found it a problem or two, although they have achieved it. Romania certainly would, having a fund of difficulties.
The Central Bank (BNR) has decided to quote its domestic currency, the lei, entirely against the Euro, as of next year, as the country aspires to EU membership.
BNR management proposes a 5-6 year period of transition after accession to the EU before adopting the Euro as Romania's official currency, central bank Vice Governor, Cristian Popa, said recently.
"It is a perspective offered by the central bank and is our offer for the political debate over this issue. The issue has been discussed by the BNR managing board, but it is not our last word," he said after a meeting with representatives of financial institutions, foreign banks, rating agencies and international press.
Romania will enter a monetary union pre-accession period within three to four years after integration on the common European market, he said. The adoption of the Euro as official currency requires a monitoring interval of at least two years, over which the applicant state should be obliged to observe the economic performance criteria established in Maastricht.
According to the Maastricht Treaty, the budget deficit limit has been established at three per cent of the gross domestic product, and the public debt at utmost 60 per cent of the gross domestic product.
"In our vision, deadline set for 2012-2013 should not be exceeded. We have proposed a period of three to four years after our accession to the EU until the moment when we'll begin monetary union membership negotiations, just to be better prepared. We wish to reduce the monitoring interval to a minimal period, that is the two years already required by the European Commission," Popa said.
At the same time, the BNR official added that such postponement will allow the continuation of the necessary structural adjustments after Romania's accession to the union.
During the monitoring period the central bank of an applicant state does have a limited freedom. The currency exchange of the national currency will have a free flotation, and administrative moves by the central bank are banned.
The National Bank of Romania in January increased the weighting to 25 per cent. "We're moving closer to the EU, and it's almost a rule to reference only to Euro," Isarescu said. Romania's central bank uses the currency basket for statistical purposes to measure the performance of the lei. It does not use the basket to fix a favoured level for the currency, preferring to buy or sell lei only to smooth out volatility.
Romania became the last country of all EU candidates to start measuring its economic performance in Euros last year. Nearly 60 per cent of the country's trade is with EU countries, with an equal portion of its foreign reserves in Euros. Isarescu has said the country won't be able to use the Euro as its currency before 2011, at least four years after its planned accession into the EU in 2007.
Romania may double grain output in 2004
Romania's grain production in 2004 is estimated to double in 2004, at 5.4m tonnes, from 2.5m output obtained in 2003, Ukrainian consultancy firm, UkrAgroConsult stated, New Europe reported.
This increase tendency is anticipated by analysts for the whole Black Sea region and is attributed to favourable weather conditions in Eastern Europe and in the cereal manufacturing countries from the former USSR. Thus Ukraine, Russia, Kazakstan, Bulgaria, Romania, Hungary, Poland and Turkey collectively may produce up to 110.9m tonnes in 2004 compared to 84.1m tonnes last year.
Serhy Feofilov, head of UkrAgroConsult, estimated during an international conference in Kiev, that Ukraine will crop 13.5m tonnes in 2004, Russia - 45m tonnes, Kazakstan - 10.0m, Bulgaria - 3.5m, Romania - 5.4m, Hungary - 5.0m, Poland - 9.5m and Turkey - 19.0m. At the same time, analysts said Ukrainian and Russian grain exports were unlikely to rise sharply in the 2004/05 July-June season despite the jump in grain production. They said Ukraine and Russia would prefer to put grain into state stocks, depleted after a poor grain crop last year.
BRD records 8% drop in 2003 net profit
Romania's second largest bank Banca Romana pentru Dezvoltare - Groupe Societe Generale (BRD-GSG) reported recently a 8.2% drop in net profit in 2003 in real terms, as compared to previous year figures, mainly due to the enforcement of international accountancy standards and to restrictive measures on credits' classification and provisions norms issued by the Romania's central bank, Chairman Bogdan Baltazar told journalists, New Europe reported recently.
Increased competition, mainly in retail banking, was another factor which shrunk the bank's profit, general manager of BRD-Soc. Gen Patrick Gelin explained. At the same time, central bank kept the interest high and BRD invested a lot in the new headquarters, bank officials said.
Last year's net result was 2,358bn Romanian lei (about 62.7m) the bank said. Net income rose by 10.5% and the gross result of exploitation increased by 14.3%, in real terms. The entire assets of the bank registered a real increase of 11.3%, up to 81,187bn lei (about 2bn). Customers' deposits rose from 48,438bn lei to 61,145bn lei (1.5bn), while the granted credits rose from 30,229bn lei to 49,298bn lei (1.2bn), Gelin said. The individuals carried out 51% of the deposits and contracted 28% of the entire number of credits.
The general manager of BRD added that the bank holds 15.7% of the company-granted credit market and holds 18.1% of the people-loaned market. At the same time, the bank drew 15.1% of the companies' deposits, 16.1% of population's deposits and issued 909,964 cards, representing 19.5% of the entire number. The bank granted to individuals consumption credits worth 13,597bn lei, an increase of 139% as compared to 2002, given that this market segment rose by 215% in the banking system.
Banks to pick up BCR shares
Romania will sell a further stake in Banca Comerciala Romana, its top lender, only after prior consent from the International Finance Corp and European Bank for Reconstruction and Development, which together agreed to buy 25% in the bank, Finance Minister, Mihai Tanasescu, said recently, Bloomberg financial news agency reported.
Tanasescu said he and the EBRD's President Jean Lemierre agreed at the EBRD's annual meeting in London on how Romania can sell another stake of at least 25% in the lender this year.
Holcim with more investments
Swiss group Holcim plans to invest 20m in Romania in 2004, in particular in upgrading cement plants, expanding the network of ecological concrete stations and upgrading existing stations, New Europe reported recently.
Kurt Habersatter, chairman and general manager of Holcim Romania, said the cement, concrete and aggregate producer will launch operations in a new production line in the Turda white cement plant, a 3.5m investment. The company will open two ecological concrete stations in Bucharest and Timisoara, a 3m project. In May, the Romanian branch of the Swiss group launched cement production in the Alesd plant, for which in the past years about 70m has been allotted.
2 power distributors on sale
Romania's government approved the sell-off strategy for two state-owned power distributors, Electrica Oltenia and Electrica Moldova, with the state offering controlling stakes to strategic investors in a first stage. The privatisation authorities will accept the joint offer between a strategic investor and a financial institution, in order to finance the deal. A consortium led by the Bank of America Securities will cover consultancy activities for the deal. Electrica Moldova claims 1.29m customers, while Electrica Oltenia says it has a portfolio of 1.34m customers, New Europe reported.
Romania and Hungary bridge old gap
Thousands of Romanians and Hungarians recently attended the opening of a park symbolising reconciliation between their neighbouring countries after centuries of disputes, the International Herald Tribune reported recently.
Prime Minister Peter Medgyessy of Hungary and the Romanian culture minister, Razvan Theodorescu, led the celebrations at the Romanian-Hungarian Reconciliation Park in the Transylvanian city of Arad in western Romania, near the Hungarian border.
The ceremonies, which attracted a crowd of 7,000, were also attended by Jonathon Scheele, Ambassador to Romania of the European Union, which Hungary joined on May 1st. Romania hopes to become an EU member in 2007.
Medgyessy, whose family originated in Transylvania, which once was part of Hungary but now belongs to Romania, hailed the geopolitical significance of the improvement in relations between the two countries that has gathered pace in recent years.
"I think Europe will win through this reconciliation," the Mediafax news agency quoted him as saying. "We know history is not rational, but we want a better world, rich and successful European nations."
The ceremony included the restoration and unveiling of a controversial monument, dismantled 70 years ago, that commemorates 13 generals regarded by Hungarians as heroes of the 1848 revolution, in which Hungary tried to break away from the Habsburg Army in 1849.
Romanians accused Hungarian forces of killing 40,000 of their compatriots during the 1848 revolution when Romanians in their turn struggled against Hungarian domination.
The statue had been in a military museum since being dismantled in 1924 after Transylvania was taken from Hungary and awarded to Romania under the Treaty of Versailles after World War I.
At the ceremony, Medgyessy unveiled a model of another monument to be erected in the park to represent the Romanian revolution of 1848.
Theodorescu said: "Hungarians and Romanians, Romanians and Hungarians, we are capable of looking to the future together, necessarily together."
A few dozen dissidents chanted "thieves" and "traitors" during his speech.
Hungarian requests to restore the statue of the executed generals, known to Hungarians as the statue of liberty, aroused controversy in Romania. In a compromise, the authorities agreed to create the reconciliation park to hold both monuments.
About 1.4m ethnic Hungarians live in Romania.
GSK to invest in Europharm
GlaxoSmithKline Romania (GSK) said it would invest US$4m this year to develop a storage facility at pharmaceutical products distributor Europharm, New Europe reported.
"GSK's investments in Europharm envisaged all areas of activity, allowing Europharm Distribution to complete the strategic re-positioning process," Roberto Musneci, the GSK Romania President, said. The next step would be the modernisation of 33 drug stores. Europharm reported a 27% turnover increase in 2003, to US$97m.
RomTelecom inks deal with Intec
Romanian phone provider RomTelecom awarded a two million Euro contract to Intec Telecom Systems, a global provider of Operation Support Systems, the London based company said recently, New Europe reported.
Intec will provide RomTelecom with Inter-mediaE, aiming to allow the user to handle the processing of a great deal of data needed for billing simultaneously with other IT programmes. "The flexibility and scalability of Inter-mediaE will help bring RomTelecom's services to market quickly and help support the company's nationwide expansion as it grows its customer services.
Siemens railway engine arrives
Astra Vagoane Calatori SA recently launched the first railway engine made in Romania under the commercial contract between the National Railway Passengers Corporation (SNTCF CFR Calatori) and Siemens, Romania's Ministry of Transport, Construction and Tourism (MTCT) said in a statement, New Europe reported recently. Under the contract signed for the "National Programme for equipping CFR Calatori with railway engines," of the total 120 trains, 57 will be supplied from Germany and 63 will be assembled in Romania. In order to ensure a progressive integration of components in train building, the programme is structured into technological batches.
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