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ROMANIA


 

 

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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)

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Update No: 163 - (24/12/10)

A political upheaval
The Romanians used to live under a glacial dictatorship, that of Nicolai Ceausescu. Ever since his demise on Christmas Day, 1989, they have been ringing the changes like crazy, as if to prove to themselves they are now free.

Politics in Romania were turned upside down, for example, exactly two years ago, after the surprise resignation of the candidate for Prime Minister. The centrist Democrat Liberal Party narrowly won the December 2008 election, just beating the leftist Social Democrats, with whom they agreed to form a coalition.

Party leader Emil Boc proposed the economist Thodor Stolojan as Prime Minister, but Stolojan decided not to pursue the idea. Stolojan gave no reason for declining the post, saying simply that more guarantees were needed about the make-up of the new government.

He was replaced as candidate for premier by Emil Boc. Romanian President Traian Basescu has the legal right to appoint the prime minister, but his close ties to Boc suggested that it would be a formality.

Dire economic situation
Romania has been mired in recession and the government has slashed public sector wages by a quarter and hiked sales tax from 19 to 24 percent on July 1 to reduce the budget deficit - measures derided by Romanians, but requested by the International Monetary Fund.

The cutbacks were aimed at meeting conditions for a €20 billion ($26 billion) loan from the IMF, the European Union and the World Bank to bail the country out of serious financial difficulty it encountered since 2007, when its economy contracted by 7.1 percent. Some of the money was used to pay pensions and wages.

Yet another political upheaval
In February 2009 Prime Minister Emil Boc fired the finance minister, labour minister, agriculture minister, transportation and communications minister, saying it was necessary to continue economic reforms. Economy Minister Adriean Videana told Boc he wanted to quit the government to return to party business. Boc said he chose the new Cabinet based on professional merit, but critics accused him of firing the ministers to strengthen his own hand.

Boc named six replacements, relieving some of the immediate political instability. But there were concerns that the new economy and finance ministers are little known names in Romania. Boc did not fire any of the ethnic Hungarian ministers, likely because he counts on the support of their party in Parliament.

Finance Minister Sebastian Vladescu criticized his firing saying it was politically motivated. Earlier, he was chastened by Boc for saying that Romania would scrap the flat personal income tax in favour of a progressive tax system that taxes top earners at a higher rate. Vladescu had played a key role in IMF negotiations.

David Oxley, an emerging market economist for Capital Economics in London said: “The question is whether there is the political will to make the cutbacks. Will (the firings) affect the political will?” he told the Associated Press.

Several key members of the governing Democratic Liberal Party called for Boc to resign. The government’s popularity has plummeted in recent months because of spending cuts, but also due to a growing dissatisfaction with President Traian Basescu, who is seen as playing a key though informal role in government affairs.

The leu, Romania’s currency, dipped by 0.3 per cent following the news.

The IMF predicted that Romania’s economy would shrink by 1.9 percent that year, in 2009, before returning to growth in 2011.

The opposition Social Democrats said they would file a motion of no-confidence, but it is not clear whether it can succeed because Boc’s Democratic Liberal Party has the support of minority ethnic Hungarians whose party is also in government.

Political instability has plagued Romania in the last year before presidential elections that Basescu won. Boc’s previous government collapsed last year which led to the temporary suspension of Romania’s IMF agreement.

Danube summit on EU strategy for the Danube Region
Romania is of course a vital country on the Danube. It is logical place for a conference on the subject.

Participants in a Danube summit that started in Bucharest on November 8th adopted a declaration on the EU Strategy for the Danube Region. Austria, Bulgaria, the Czech Republic, Germany, Hungary, Romania, Slovakia and Slovenia reiterated in the document their commitment to implementing the strategy and its importance to navigation and energy inter-connectivity, environmental protection, water resources preservation and risk management. They urged all EU member states to support implementation.

Attending the summit were delegations from a total of 14 Danube River countries: those mentioned above plus Bosnia and Herzegovina, Croatia, Montenegro, Moldova, Serbia and Ukraine, along with officials European institutions. Among them is European Commission President Jose Manuel Barroso.

Joining the Schengen Zone
As the most recent countries to join the EU, Bulgaria and Romania do not yet belong to all its institutions.
On the sidelines of the summit, Bulgarian Prime Minister Boyko Borisov and Romanian counterpart Emil Boc asked their European partners to help their countries join the EU's border-free Schengen Zone by the spring 2011.