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ROMANIA


 

 

In-depth Business Intelligence

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
Millions of US $ 60,358 44,428 38,700 52
         
GNI per capita
 US $ 2,310 1,850 1,720 100
Ranking is given out of 208 nations - (data from the World Bank)

Books on Romania

REPUBLICAN REFERENCE

Area (sq.km)
237,500

Population
22,355,551 

Capital 
Bucharest 

Currency 
Leu

President 
Traian Basescu

Private sector 
% of GDP 
40%


Update No: 113 - (26/10/06)

Bulgaria and Romania will join the EU
All the Balkan states want to join the EU. Only two of them are definitely going to do so - one of them being Romania in January.
It is doing so along with Bulgaria, itself an honorary Balkan state, although extending outside too, as does Romania.
Bulgaria and Romania are very different countries. But they share a mentality of legerdemain when it comes to matters to do with money and property, bred by decades of communism, no doubt.
This is very well-known in Europe. It makes their reception into the EU a fraught affair.
The basic argument for their inclusion is clear. EU membership will deeply anchor democracy, the rule of law, and the free market economy in the new member states and will enhance regional stability. It was agreed in the turbulent 1990s when it made great sense to promote stability in the Balkans. 
Accession of both countries was already agreed upon during the EU summit in Helsinki, in December 1999. The Thessaloniki Summit (June 2003) set the accession-date of January 1st 2007. On April 25th 2005, both countries signed their Accession Treaties in Luxemburg. These treaties also contain protocols on a possible one-year postponement, but cancellation of the operation as such was out of the question, but deep concern remains.

Balkan summit on joint action to combat crime and corruption
In the light of this nothing could have been more timely than a Balkan summit in mid-October. The presidents of six Balkan countries agreed on October 16th to join forces in the struggle against organised crime and terrorism, which was termed a "global threat" with serious repercussions for southeast European countries. 
At a regional summit in Karadjordjevo, a tourist resort north of Belgrade, Serbian president Boris Tadic and presidents of Albania, Romania, Croatia, Macedonia and Montenegro, agreed that joint action was needed as a precondition for the security of individual nations and the region. Tadic warned that there was more solidarity between criminals in the region than between countries and peoples.
"Organized crime and terrorism represent a global security threat, to which the countries of southeast Europe are exposed in a great measure," the declaration said. The meeting, held behind closed doors and amid tight security, was also attended by EU's justice and security commissioner Franco Frattini and a member of Bosnia's state presidency Borisav Paravac. Bulgarian president Georgi Parvanov, failed to show up for unspecified reasons, but probably because he was involved in a re-election campaign ahead of an election less than a week later on October 22nd.
Terrorism, in collusion with organized crime as a main source of financing, represents the main threat to peace, stability and democratic development of the region, the document stated. "The biggest problem is that in most Balkan countries crime and corruption are a part of the society and there is much greater solidarity between organised criminals in the region than between political structures, countries and peoples," Tadic warned the summit. 
The six Balkan leaders have agreed to form a joint team of experts which would, in cooperation with the competent bodies of the European Union, devise a plan to fight organised crime and corruption. "No country is immune to corruption and crime and that is a problem on whose solution we must work jointly," said Croatian president Stipe Mesic. 

Romania, Azerbaijan to expand economic ties 
Romania is not neglecting its extra-European relations, notably energy suppliers. That it ran out of its own oil under the profligate Ceaucescu, who squandered its proceeds on all sorts of hare-brained projects, is a cause for chagrin.
President of Azerbaijan Ilham Aliyev had a meeting with the President of Romania Traian Besescu, who was on an official visit in mid-October. The Head of the Azerbaijan State stated that in the solution of problems of safety in region, including in settlement of the Armenia-Azerbaijan, Nagorno Karabakh conflict, the position of Romania is very positive. 
President Aliyev said: "When in 1991, Azerbaijan had restored its state independence, Romania became the second country to recognize us as independent republic. In the last 15 years, we have quickly developed relations, and we very actively cooperate in political-economical and humanitarian spheres, in all directions. We are allies; the Romanian-Azerbaijan relations at the present stage have the most serious influence on what happens in the entire region. 
Cooperation between the regions of the Black and Caspian seas becomes stronger, including due to the policies pursued by Romania and Azerbaijan. Political-economical links are thriving between us, particularly as regards transport and power corridors

President Pushes Country's Role As Energy Conduit 
This is all part of a long-term concerted policy by Romania.
Europe should be concerned at Russia's "unique monopoly" as a gas supplier, says Romania's president -- and Romania offers an ideal route for alternative pipelines.
President Basescu wound up a three-day visit to Washington on July 28 at a forum where he presented his country as an ideal conduit to bring Caspian oil and gas to the West. The aim, he said, was to keep Europe from being beholden solely to Russia's state-owned energy monopoly, Gazprom.
Basescu reminded his audience, at a forum about Caspian oil sponsored by the Jamestown Foundation, a private Washington think tank, that Europe now imports much of its gas from Russia's state-owned monopoly Gazprom. 
He urged "democratic countries" to find alternative sources of energy because of the "increased risk" posed by the "unique monopoly" enjoyed by Gazprom in Europe and as a means of "diminishing the political impact of using a single company...to supply Europe."
Basescu described two pipeline proposals as alternatives to energy from Russia. One, measuring 1,300 kilometres, would move Caspian crude oil from Constanta, on Romania's Black Sea coast, to Trieste in northeastern Italy. He said this project is supported by both the United States and Europe.
The second, the details of which have yet to be worked out, would be a 2,800 kilometre pipeline, requiring an investment of about US$4.8 billion. Basescu said Turkey, Bulgaria, Romania, Hungary, and Austria have already agreed to allow such a pipeline to run through their territory. 

The US 'Mantra' Is Diversity 
Also appearing at the forum was Lana Ekimoff, the director of Russian and Eurasian affairs at the U.S. Department of Energy. She agreed with Basescu that European countries that were once part of the Soviet sphere of influence are the most vulnerable to unexpected interruptions of their energy supplies.
Ekimoff did not mention problems that Ukraine and Georgia faced last winter when their sources of gas were threatened or severed entirely. Rather than potential political differences between Russia and its energy customers, she emphasized future demand. 
"Countries in Europe that were formerly part of the Soviet bloc are much more dependent on Russia than others. But the reality is that as demand grows, there is the potential for greater dependency," she said. "Russia provides about one-third of Europe's gas demand, and Europe's demand is expected to grow about more than 30 percent by 2020. Romania is fortunate, as [President Basescu] mentioned, in that it has some oil and gas resources. However, as its own demand grows and its resources are depleted, it will have to import more."
Ekimoff highlighted the broad investment in Caspian oil by private Western companies, particularly US energy corporations. And she pointed to four areas where U.S. companies have invested in the region's energy -- one in Azerbaijan and three in Kazakhstan.
But the US Energy Department official stressed that the US government is not interested only in the natural resources of the Caspian, and that it opposes energy monopolies of all sorts.
"We are not just interested in their oil and gas contributions to global markets, but also share a common goal of building an energy sector in their countries that is diversified, cost-effective, and secure to support their growing economies," she said. "The US mantra domestically and internationally is energy diversity both of suppliers and sources. Competition among sources is essential to energy security, and is a core part of our bilateral discussions."
While Basescu and Ekimoff spoke of alternatives to energy delivered by Russia and an avoidance of monopolies, perhaps the real point of the meeting was to make sure that Caspian energy delivered to the West circumvents Russia altogether. That is, at least, the view of Vladimir Socor, a senior fellow at the Jamestown Foundation, which sponsored the event.
In an interview with RFE/RL before the meeting, Socor said Russia's Western energy customers have to worry about more than just accidental interruptions of service. 
"The key to the project [outlined by Basescu] is the concept of bypassing Russia," Socor said. "There can be no energy-supply security for the Euro-Atlantic community if an inordinate share of its supplies come from Russia or via Russia from third countries. This is why Georgia's location is of key interest to the Euro-Atlantic community and Georgia's independence and security as a nation state is a major interest of the United States and Western Europe."
Socor said the West's over-dependence on Russia for so much of its gas would be, in his words, "fraught with enormous political risk."

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CREDIT RATINGS

Moody's upgrades Romanian government's ratings to Baa3 


Moody's Investors Service upgraded the Romanian government's long-term and short-term foreign and local currency ratings to Baa3/P-3 with a stable outlook, the rating agency said on October 6th on its website. 
The upgrade was prompted by continuing improvements in Romania's economic institutions and a reduction in the government's debt burden, Moody's explained. Accession to the EU in January 2007 should anchor these improvements and provide impetus for a continuation of reforms, the rating agency added. As a result of the upgrade of the government's ratings, the foreign currency country ceiling for long-term bonds was upgraded to A1. The short-term foreign currency country ceiling remains at P-1. The foreign currency bank deposit ceilings were also upgraded to Baa3/P-3. The outlook for these ratings is also stable, New Europe reported. 
The Aa3 local currency ceiling, which represents the highest possible rating that could be assigned to obligors and obligations denominated in local currency within a country, and the Aa3 local currency deposit ceiling were not affected by these rating actions. "Romania's progress in most relevant areas has reduced credit risk to the point where the country can now be considered an investment-grade credit" Moody's Analyst, Kenneth Orchard, said. The government's debt burden has declined significantly over the past few years as interest rates have fallen and fiscal deficits have remained under control. The government's economic reform programme remains on-track, as evidenced by the privatisation of a number of large state-owned enterprises over the past year. Improvements in the conduct of monetary policy, particularly the introduction of an inflation targeting framework, have increased macroeconomic stability. Inflation could fall below six percent this year from over 40 per cent five years ago, even in the face of strong economic growth. Orchard noted that Romania's accession to the EU in January 2007 has been confirmed by the European Commission. Accession will have a large microeconomic impact on the country, which judging by experience should be positive for economic growth. The country will also benefit from significant EU funds, which are needed to improve institutions and build infrastructure. The European Commission has warned that certain remedial measures are likely to be implemented as progress was insufficient in some areas. Moody's, however, believes that the imposition of remedial measures could provide some positive benefits by sustaining the reform effort after entry. 

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ENERGY

Petrom approves Kazakstan oil field plan

Romanian oil and gas producer, Petrom, has approved the development plan for the onshore Komsomolskoe oil field in western Kazakstan, which will see the company invest some US$190m to bring online 10,000 barrels a day of oil equivalent from 2008, the company said recently in an emailed statement. Petrom, which is majority owned by Austria's OMV, has completed a 3D seismic programme at Komsomolskoe, on which it has based its development plan, the company said, New Europe reported.
The plan consists of building a 90 kilometre access road, drilling six horizontal production wells, constructing gas and oil separation facilities and laying an 80 kilometre oil export pipeline. "This is a far reaching project, requiring US$190m in investments, which will bring us closer to our 2010 objective of reaching a production level of 30,000 boe/d in the Caspian Region," said Werner Ladwein, member of the Petrom managing committee responsible for exploration and production.
"The Caspian Sea region is a core region for us - it is clearly a high potential area to be fully used and supported by investments," he said.
Petrom operates Komsomolskoe through local subsidiary Too Kom Munai, which it acquired in March 2003 and which holds the development and production rights for the field. Petrom is running exploration and production operations in four areas in Kazakstan and is already producing more than 4,000 boe/d through its local subsidiary, Tasbulat.
It is also exploring at the Kazak Jusaly block where an exploration well this year tested at a flow rate of 200,000 cubic metres of natural gas and 70 cubic metres of condensate per day, Petrom said.

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FOOD & DRINK

Romanian food service market to reach 2.7bn Euro in 3 years 

Romanian food service market - restaurants and bars - will reach some 2.7 billion Euro in 2009, amid the rise in the number of hotels and restaurants, as well as the improvement in the clients' living standards and, implicitly, in their education, said recently an Euromonitor report, titled "Consumer Services in Romania." According to certain unofficial estimates, there are some 6,000 restaurants and bars operating on the domestic market, noted Ziarul Financiar. The report was drawn up last December and it analyses a part of the food service market, including restaurants, catering and fast-food chains, except hotels, New Europe reported.

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INFORMATION TECHNOLOGY

IT&C market reports 22% growth over 7 months

The Romanian market of information technology and communication (IT&C) reported a 22 per cent rise over the first seven months of this year, preserving the developing trend of 2005, IT&C Minister, Zsolt Nagy, said recently, New Europe reported.
"In 2005, the Romanian IT&C sector registered the highest development rate (20.2 per cent), compared to the other sectors of the economy, contributing eight per cent to the GDP. This makes the Romanian IT&C market one of the markets with the highest growth pace in Central and Eastern Europe," Nagy said. He said the development of the IT&C sector stimulates the emergence of some new types of private business in Romania, encouraging the use of new technologies on a large scale. "The development of the IT&C sector is visible, taking into account the fact that the IT sector only (services and software) has registered an average increase of 25 per cent over the last five years," the minister explained.
For 2006, the turnover in the IT sectors is estimated at one billion Euro, with an export potential of 350 million Euro and some 42,000 employees in the field.
In the communications sector, the turnover for 2006 is put at four billion Euro. "The launch of the branding strategy for export over 2006-2009 - the first field in which such a strategy is developed - proved that the IT&C sector is one of the most dynamic sectors in Romania," Nagy said.
The branding strategy for export will allow the identification of some competitive advantages of the Romanian IT&C market, which will be used in promoting Romania's image, and also in attracting foreign investments.

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PHARMACEUTICALS

A&D Pharma pharmacy chain plans London IPO 

The Romanian pharmacy chain A&D Pharma, which is majority-owned by the Dutch investment fund Sograno, says it plans to offer 25 per cent of the company in the form of a GDR on the London Stock Exchange (LSE), investment bank Wood Company said in a report on September 28th.
A&D Pharma runs over 200 pharmacies in Romania. Its 2005 turnover was almost 250 million Euro, Wood said. A&D Pharma Holdings NV said it intends to make an initial public offering of its ordinary shares in the form of Global Depositary Receipts (GDRs). A&D Pharma is incorporated in the Netherlands, not Romania, which may be why its owners have chosen a LSE listing over Bucharest, Wood Analyst, Bram Buring, said, New Europe reported.
"Like Poland, Romania is rich in small and medium-sized companies that are looking to the market to raise new capital. All of the SIF fund managers we spoke to were very positive on the IPO market for the next few years," Buring said. The company intends to apply for the admission of the GDRs to the official list of the United Kingdom Listing Authority and to trade on the regulated market of the London Stock Exchange PLC. The company owns Romania's leading wholesale pharmaceutical network, Mediplus Exim SA, which offers a wide range of value added services to pharmaceutical producers and client pharmacies. The offering is also intended to include the ordinary shares, which are currently held by Sograno BV, the principal shareholder of the company.

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