Friday, March 30, 2007

Romanian fiscal deficit

Romania's government ran a consolidated budget deficit of 0.67 percent of gross domestic product at the end of February, compared with a surplus of 0.6 percent in January, its Finance Ministry said yesterday. (Reuters)

KBC Lease completes acquisition of majority stake in Romstal Leasing in Romania

Following the announcement on 15 December 2006, KBC Lease today closed the deal to acquire 99.34% of Romstal Leasing, the largest independent leasing company in Romania. KBC Lease also acquired full ownership of INK Insurance Broker, the seventh largest insurance broker in Romania.

As planned, it paid 70 million euros in the deal. With this move, KBC has taken another important step towards achieving its strategy of expansion in Central and Eastern Europe, its other home market.

Romstal Leasing is the largest independent leasing company in Romania. At the end of 2006, it held a 4.20% share of the Romanian leasing market and was ranked thirteenth. The bulk of its financing activity (43.30%) relates to car leasing, but it also leases delivery vans, lorries, machinery and equipment and real estate. Romstal Leasing boasts a high level of profitability, with a ROE of 29.50% in 2006 and net profit growth of 22.30% in the period 2005-2006. During this period, its leasing portfolio also expanded by 82.90%. The company has experienced enormous growth in the last few years and has opened new branches throughout Romania. It now has a network of 20 branches in almost all of the country’s major cities and employs 91 people. To take advantage of the rapidly growing market, the company plans to expand its network to 35 branches by 2008. On 21 March 2007, the company was licensed as a non-financial institution by the National Bank of Romania.

INK Insurance Broker is the seventh largest insurance broker in Romania (up from tenth in 2004). Established in 2003, INK Insurance is a fast-growing sister company of Romstal Leasing, providing products and services to Romstal Leasing and other companies. It has a current workforce of 25 FTEs and enjoys a high level of profitability, with premium income going up by 56.30% and earnings increasing by 51.90% in the period 2005-2006.

Over the past decade, KBC has built up a strong presence in Poland, Czech Republic, Slovakia, Hungary and Slovenia. KBC’s long-term strategic plans include continuing to explore market opportunities in future new EU Member States and beyond.

In Central and Eastern Europe, KBC Lease is present via ČSOB Leasing (Czech Republic and Slovakia), K&H Leasing Group (Hungary) and Kredyt Lease (Poland). KBC Lease occupies leading positions on the leasing market in the Czech Republic (No. 1 with a 15% market share), in Slovakia (No. 1 with a 17% market share), in Hungary (No. 6 with an 8% market share) and in Poland (less than a 1% market share).


For more information, please contact:

Luc Cool
Director of Investor Relations, KBC Group
Tel.: (+32) 2 429 40 51
investor.relations@kbc.com

Viviane Huybrecht
Head of Group Communication and the KBC Press Office
KBC Group Spokeswoman
Tel.: (+32) 2 429 85 45
viviane.huybrecht@kbc.be or pressofficekbc@kbc.be


Note to the editor

KBC Group NV: www.kbc.com

KBC Group NV is one of the leading financial groups in Europe. A multi-channel bancassurance group with a geographic focus on Europe, it caters mainly for retail and private banking customers and small and medium-sized enterprises. Besides focusing on providing retail and private bancassurance services, it is also active in asset management, the provision of corporate services and market activities.

KBC occupies significant, even leading positions in its two home markets of Belgium and Central and Eastern Europe and has an extensive private banking network operating under the European Private Bankers concept. It has also selectively established a presence in a number of other countries and regions around the world.

Over the past decade, KBC has built up another strong presence in Poland, Czech Republic, Slovakia, Hungary and Slovenia. KBC’s long-term strategic plans include continuing to explore market opportunities in future new EU Member States and beyond. KBC Securities, the broking company of KBC Group, recently acquired Swiss Capital, the second biggest independent broking company in Romania and Equitas, the leading Hungarian online retail broker. At the end of January KBC and Kontrakt Sofia reached agreement for KBC to acquire 70% ownership of DZI Insurance, the market leader in non-life and life insurance in Bulgaria. Following the acquisition, KBC will launch a public bid for the remaining 30%. As part of that deal, KBC will also acquire DZI INVEST, a securities broker active on the Bulgarian Stock Exchange.

KBC Group NV is listed on Euronext Brussels and the Luxembourg Stock Exchange (ticker symbol ’KBC’).
With a market capitalisation of around 32 billion euros, KBC is one of the biggest companies in Belgium and a leading financial group in Europe, employing 51 000 people and catering for 11 million customers.

KBC Lease Holding NV: www.kbclease.com

KBC Lease Holding NV is a wholly-owned subsidiary of KBC Group NV. KBC Lease Holding NV manages a European network of leasing companies providing general lease, real estate lease, full service car lease and pan-European Vendor Finance.

KBC Lease has established a presence in 13 other countries in Western and Southern Europe with leading positions in the home markets of KBC.

Romania: Environment tax could raise prices of household appliances

27 March 2007

Household appliances will become more expensive after the implementation of the environment tax that includes the recycling costs, though prices of appliances were announced to go down early this year due to changes in border policy, ACT Media news agency reports.


The National Agency for Environment Protection (ANPM) announced it would start together with the Environment Guard and the National Authority for Consumer's Protection a program of recycling old household appliances as of April.

The program stipulates that the producers and importers of home appliances will have to register their products with the ANPM before selling them and it will be their duty to recycle them. The old household appliances will be stored in special places in exchange for about 20 euros.

The buyers will be the ones to pay the environment tax and the money will reach the producers who have the duty to recycle the household appliances.

Source: ACT Media News Agency

Romania : Multi-brand outlet coming up near Bucharest

March 30, 2007


Escape Outlet Shopping Center located 21 kilometres away from Capital Bucharest is the first project developed in local market by Greek-owned company American Outlet Overseas.

City’s first multi-brand outlet includes more than 70 stores and is expected to be completed by end of this year with a total investment of nearly Euro30 million.

According to company officials, Escape Shopping Center will mainly focus on apparel and garment retailing.

Staff's old uniforms sent to Romania

Mar 29, 2007

UNIFORMS once worn by staff at Hinckley and Rugby Building Society are on their way to Romania.

The building society is supporting a project organised by Hope Community Church, in Hinckley, which helps young people overseas to get into work.

Church spokesman Gwyn Williams said: "Clothing is in short supply in Romania and the uniform donated by the building society is greatly appreciated."

Building Society spokeswoman Lisajane Gooden said staff had a new uniform every three years and it was decided to put the old uniform to good use.

Analysis: Romania adds to N. Korea haze

By SHIHOKO GOTO
UPI Senior Correspondent

WASHINGTON, March 29 (UPI) -- Revelation that a Romanian was among those who were kidnapped by the North Korean government in the 1970s and 1980s adds to the already bizarre saga of Pyongyang's efforts in years past to train its spies. Yet even as the news has shocked those in Romania as well as people in the East Asia region, the latest addition to the list of abductees is unlikely to have any impact on ongoing international efforts to denuclearize North Korea, even though Japan may wish otherwise.

Last week the Romanian daily newspaper Evenimentul Zilei reported that the then-27-year-old Doina Bumbea was abducted by North Korean agents from Rome in 1978 and was forced by Pyongyang to train agents in foreign languages. Meanwhile, this week Japanese daily Asahi Shimbun interviewed Bumbea's brother Gabriel in Romania, who confirmed that photos of her from North Korea were indeed his older sister, who was an artist married to an Italian.

Bumbea is certainly not alone in being lured away by North Korean agents on false pretenses, only to find herself being forced to work for Kim Il-Sung's regime. In Bumbea's case, she reportedly was lured by being told that she would be able to exhibit her artwork in Japan.

The latest report adds another layer to the drama of North Korea's actions on the international stage over the past decades, and some Japanese analysts argue that it could give greater leverage to the Japanese government as it seeks to gain more information on the 17 people who were abducted by Pyongyang in years past before it entertains the possibility of providing aid to the country. South Korea and China too have accused Pyongyang of abducting its citizens too, but Japan has been at the forefront in clamoring for more information on those who went missing. For its part, North Korea has insisted that it only kidnapped 13 Japanese nationals, of whom five were returned to Japan in 2002.

Information on the Romanian's life in Pyongyang first came to light in 2005, when former U.S. Army soldier Robert Jenkins published his memoir of life in North Korea, where he had been since 1965 after defecting from the military while stationed in South Korea. Jenkins later married a Japanese national, Hitomi Soga, who had been abducted along with her mother as she was taking a walk near the coast of her home town in northern Japan. Soga was one of the five Japanese released from the country five years ago, and her husband --a U.S. citizen -- was allowed to leave with her. Jenkins recalled in his book that a Romanian woman had been one of the few foreigners that he and his wife had interacted with, and Jenkins wrote that she died of cancer in 1997. Bumbea's family in Romania had actually conducted a funeral for her in 1984, after not hearing from her for six years.

There are already moves in Japan to get Romania involved in putting pressure on Pyongyang to provide more information about its abduction program as a result of Bumbea's disappearance.

Asahi Shimbun reported that the head of the Japanese group representing those who were abducted will be going to Romania in the near future to meet with Bumbea's family, which would increase the group's lobbying power beyond the Japanese borders. The newspaper also reported that the Romania Foreign Ministry had contacted its counterpart in Pyongyang to obtain more information on the woman's kidnapping but has not yet received any reply.

Bumbea's abduction "highlights the extent of North Korea's wrongdoing," a Japanese government official said, adding that it could bring Japan and Romania closer together in trying to get Pyongyang to open up about its abduction program, which the government has said it has abandoned.

It is doubtful, however, that the latest development would have any impact on the ongoing six-party talks between China, South Korea, Russia and the United States as well as Japan and North Korea. In February, Japan declined to join the four other countries as they agreed to provide 50,000 tons in heavy fuel oil to the impoverished country in return for it shutting down its nuclear reactor in Yongbyon by April 13. They have agreed too to provide an additional 950,000 tons of oil once the plant is permanently disabled and details of its other nuclear activities are provided.

Japan, however, has declared it will not be part of the aid effort until North Korea provides further information on the abductees.

Thursday, March 29, 2007

Infighting Delays Secret Service Reform in Romania

29 03 2007 Rival reform packages of president and prime minister threaten to leave current bad practices in place.

By Marian Chiriac in Bucharest (Balkan Insight, 29 Mar 07)

The power struggle between Romania’s president, Traian Basescu, and his prime minister, Calin Popescu Tariceanu, is threatening to derail urgently needed reform to the intelligence services.

Some observers say the struggle confirms the Romanian adage that “when two people fight, it is someone else who wins”, as neither man is benefiting politically from the current impasse.

No one disputes that reform in this sector is needed. Almost two decades after the fall of the communist regime, regulations from the early 1990s remain in place that grant wide powers to the country’s four secret services and allegedly encourage corruption and human rights violations.

“Under current legislation, if a secret agent puts his boots on a man’s neck and kills him, nothing will happen to him if he says he was ‘on a mission’,” said Marius Oprea, the prime minister's adviser on national security issues.

Oprea was a key supporter of a government-backed package of laws aimed at trimming the powers of the secret services. The proposals include merging some agencies and putting officials and the control of government ministries. Agents would have to obtain a court order before carrying out most activities, except those related to fighting terrorism. They would also be banned from infiltrating the media, the courts, state institutions, political parties, unions or religious groups.

The new laws would also ban the secret services from engaging in economic activity. At present, agents can set up businesses to help fund operations, and the media have been awash with allegations that some companies are fronts for the services.

The legislative package has still to be discussed in parliament but already an important opponent to the new laws has emerged in the form of President Basescu.

He is pushing his own package of legislation, drawn up by his political and military advisors and presented to the Supreme Council of National Defence, CSAT, the authority responsible for coordinating national security.

This week, CSAT is expected to give its final approval to the president’s proposals after which they will be put before parliament.

Analysts note important differences between the two competing sets of laws.

“The legislation promoted by the prime minister would introduce tougher parliamentary controls over the secret services and agents, making them accountable for any rights infringements,” Mircea Marian, a journalist from the Adevarul daily, told Balkan Insight. “The laws promoted by the president give much more power to the services.”

Marian characterised the struggle as a turf war. “The dispute between the country’s highest officials over future security laws is a sign that each seeks control over the intelligence services,” he said.

Relations between Tariceanu and Basescu have deteriorated in recent months owing to disagreements over policies to combat corruption.

The bickering has brought parliamentary work on key anti-corruption legislation to a virtual standstill. The logjam between the head of state and the executive has also delayed Romania's elections to the European parliament.

Military analyst Radu Tudor contends that the fights are bad for the country’s democracy and detrimental to its security agenda.

“Unfortunately, foolish political ambitions and a battle of personalities are affecting Romania’s interests, which still lack proper legislation on security,” he said. “We need laws to improve efficiency and boost state control over the services and reduce costs but the politicians don’t seem interested.”

Muddles over the interpretation of current security laws last week forced the chief of foreign intelligence, SIE, Claudiu Saftoiu, to resign.

Saftoiu, appointed last September by the president, handed in his notice after revealing to a parliamentary committee that the SIE had been tapping the phones of people suspected of violating national security.

Saftoiu blundered when he told deputies that the SIE was tapping phones using warrants issued by the country’s prosecutor-general, even though under the law a judge must issue a warrant for tapping people’s phones.

Saftoiu apologised, accepting that such operations needed to be carried out with the authorisation of a judge.

But Mircea Marian says Saftoiu fell victim to fuzzy security law regulations. “When the SIE wants to tap telephone conversations, it has to connect its equipment to that of the internal secret service, SRI, acting on a warrant filed by the general prosecutor,” he explained.

“After that, it is the SRI that seeks authorisation from a judge,” Marian went on. “Saftoiu was wrong only for not fully describing the taping and authorisation process.”

Saftoiu’s sudden departure appeared a new blow for President Basescu who has also been accused by his opponents of using the secret services to spy on politicians.

A parliamentary commission recently recommended suspending and impeaching him for violating the constitution and interfering in the work of government.

But to most people, the political infighting at the top and the rows over future security laws only offer further proof of the inability of politicians and public institutions to counteract the influence of the former agents of the communist-era Securitate secret police.

Polls show many people believe secret service corrupt practices are a legacy of the Securitate, which recruited tens of thousands of people to work as spies.

“Those guys are still in power in Romania, and they are not under proper legal and political control,” said Bucharest resident Matei Popescu, 62.

“The power of the former secret service officers is just the same under the new system - they just re-labelled themselves.”

Marian Chiriac is the director of BIRN Romania. Balkan Insight is BIRN’s online publication.

Romania assigned investment-grade ratings by Moody's in annual report

LONDON (AFX) - Moody's Investors Service said has assigned investment-grade ratings and a stable outlook on Romania reflect low government debt and significant economic restructuring of the past few years.

Moody's (nyse: MCO - news - people ) said in its annual report on Romania that the country also benefits from moderate inflation, ample external liquidity, and strong GDP growth.

The foreign currency country ceiling for bonds is 'A1', based on the foreign currency government bond rating of 'Baa3' and assessment of a very low risk of a payments moratorium in the event of a government bond default, Moody's said.

The stable rating outlook balances the benefits of European Union accession against the possible risk of overheating, it said.

However, the rapid credit growth to the private sector, related sharp increases in asset prices and weakening of the current account deficit are a cause of concern, Moody's said.

Sunday stroll to help orphans in Romania

Teacher aims to help others in her holidays

UNLIKE most teachers this summer, Hallglen Primary's Caroline Palmer will be surrounded by children.

The 29-year-old is raising money to work in a Romanian orphanage, caring for children in the 'failure to thrive' ward in the town of Tutova. She said due to extreme poverty, many parents are forced to leave their children in the hospital after they are born.
Caroline decided to support Romania's orphans after watching a TV news report in January. She said: "I'm not someone who is easily moved by TV, but I was this time and felt as though I had to do something to help."

The all-rounder sets off with US-based charity which will organise her placement, accommodation and meals during her three-week stay.

To kickstart her fundraising Caroline will spend nine days walking the West Highland Way with nine friends this Sunday. Money raised by her fellow hikers will go to three Romanian children's charities – Foundation for the Relief of Disabled Orphans (FRODO), Hope and Homes for Children and SOS Children's Villages.

Caroline is also looking to celebrities for signed merchandise to sell on internet auction site eBay and wants to hear from companies which can donate supplies including baby clothing, food and educational toys. The young teacher is keen to hear from anyone who can help – including anyone who's keen to walk the West Highland Way with the group.
For more information check out Caroline's website www.romanianorphans.co.uk or contact the school.

US ambassador to Romania says "political turmoil" could detract investors

The Associated Press
Thursday, March 29, 2007

BUCHAREST, Romania: The U.S. Ambassador to Romania, in rare public criticism of the government, warned Thursday that political feuding could harm the country's chances of attracting foreign investment.

"Romania's many friends are prepared to help it continue to strengthen its democratic institutions — but we need to be realistic and recognize recent political turmoil has raised doubts beyond Romania's borders," whether this is a good place to invest, said Nicholas F. Taubman in remarks to the American Chamber of Commerce in Romania.

It is the first time that the U.S. ambassador, who arrived in 2005, has publicly criticized the government and his remarks come after weeks of political bickering between President Traian Basescu and Prime Minister Calin Popescu Tariceanu.

The prime minister said Monday that relations between the two main parties in the ruling coalition had broken down, and he accused Basescu's Democratic Party of making life impossible for his Liberal Party.

Romania no longer has a foreign minister after Basescu blocked the appointment of Tariceanu's nominee for the job, saying he did not have enough experience.

In further turmoil, Mihai Razvan Ungureanu resigned last month as foreign minister at the Tariceanu's request after he failed to inform the premier that two Romanians had been arrested by U.S. troops in Iraq.

"People in private industry and in government are asking a lot of questions about Romania, trying to understand where the country is headed," Taubman added. "It is very important for Romania to continue to make progress on key areas like justice reform and in fighting corruption."

Romania joined the EU on Jan. 1 and officials in Brussels are watching the situation because the country is expected to carry out major reforms to stamp out corruption and bring its economy in line with richer Western neighbors.

"Losing traction on these reforms would not send the right signal to Romania's partners. We can only hope that things settle down, sooner rather than later," he said.

Romania gives priority to widening further coop with Kazakhstan, MFA

ASTANA. March 29. KAZINFORM. Kazakhstan charge d’affaires Bakhytzhan Ordabayev met on March 27-28 with chairman of the Romanian Senate Nicolae Vacaroiu and head of the foreign policy committee of the Chamber of Deputies of the Romanian Parliament Stefan Glaevan, the Kazakh MFA’s press service reports.

The parties debated issues related to bilateral cooperation between Romania and Kazakhstan, shared views on urgent foreign issues. Kazakh diplomat informed also of the country’s political and socio-economic reforms in the light of the annual Message of President Nursultan Nazarbayev to the nation New Kazakhstan in the new world.

Ordabayev told about the key priorities of the Kazakh foreign policy in the context of the President’s Address underlining the country’s interest in deepening and widening of ties with the EU member states and further promotion of the country’s application for the OSCE presidency in 2009.

The Romanian parliamentarians noted ever-growing authority of Kazakhstan in the international arena, the country’s success in implementation of political reforms and impressive attainments in economics, which let realize efficiently large-scale social reforms.

The Senate chairman emphasized that Kazakhstan is known as Romania’s most important partner in the Central Asian region and the country’s authorities give top priority for further expansion of relations with Kazakhstan, especially, in the sphere of economics and energy sector.

Ring smashed

Romanian authorities have dismantled a human-trafficking ring that transported women to Germany and sold them to Turkish citizens for about –5,000 ($6,700) each, border police said yesterday. Romania, which joined the European Union this year, is one of 11 countries the United Nations lists as the top sources of human trafficking. Police said the six-person gang recruited women in bars in villages in west Romania by promising them well-paid jobs abroad. (Reuters)

New Scripture translations plant seeds in Romania and Moldova.

Romania/Moldova (MNN) -- The International Bible Society is working toward the release this year of a fresh, easy-to-read Scripture translation in Romania and Moldova. The Europe division will be releasing two new first edition Bibles that use modern language while representing accuracy and faithfulness to the original texts. Equipped with a wealth of footnotes, these translations are targeted to be used by new believers for outreach and evangelism, especially among young people, as well as for general reading.

IBS is also spreading the Gospel through "Jesus--The Story of His Life Gospel of Mark." There are plans for literature distributions at orphanages. IBS staff is also working to reach youth through the Reach 4 Life programs in schools. The program is based on a proven, abstinence-based approach and focuses around a special book--a full NIV New Testament with extensive, youth-friendly helps.

The IBS-Southeastern Europe team engaged Christian medical doctors in Romania to help complete a Romanian adaptation of the notes and other non-Scripture text in their English Reach 4 Life New Testament. From there, the teams integrated the Romanian Reach 4 Life notes with the Romanian New Testament translation and published a Romanian R4L New Testament in 2005.

Pray that Christian leaders will be ready to disciple the children responding to God's Word. Pray, too, that churches in Romania will grow in number and spiritual strength upon the foundation of Scripture.

Romania on verge of cabinet shake-up

BUCHAREST, Romania -- The country appeared headed for a cabinet shakeup on Wednesday (March 28th), as the crisis within the ruling coalition deepened. Justice Minister Monica Macovei said in an interview Tuesday that she expects to be fired. The main opposition Social Democratic Party says it is no longer interested in participating in any cabinet reshuffle, and will instead leave it all up to Prime Minister Calin Popescu Tariceanu. He reportedly has asked the Conservative Party (PC) to join the restructured government, but PC has declined the offer. Analysts say that leaves a cabinet consisting of Tariceanu's National Liberal Party and the ethnic Hungarian UDMR.

Balkan Times

Moody's Says Romania May Need to Raise Rates as Spending Rises

March 29 (Bloomberg) -- Romania's central bank, which cut its key interest rate twice in the past two months, may need to raise it again as the government boosts spending, Moody's Investors Service said in its annual report on Romania.

The National Bank of Romania cut its key interest rate by half a percentage point to 7.5 percent on March 26 after the annual inflation rate in February fell to a 17-year low of 3.8 percent. The Bucharest-based bank cut the rate three-quarters of a percentage point on Feb. 9 to 8 percent.

``Interest rates may need to reverse course and rise later in the year, particularly if the government spends all that is planned,'' Moody's said. ``A growing budget deficit in a period of rapid economic growth indicates that fiscal policy is strongly pro-cyclical. This is an especial concern given the large current account deficit and incomplete disinflation process.''

Romania's government plans to widen its budget deficit this year to 2.8 percent of gross domestic product from 1.7 percent last year to increase investment on infrastructure and bring the country closer to European Union standards after it joined the bloc on Jan. 1.

In October, Moody's raised Romania's credit rating one step to Baa3, the lowest investment grade, from Ba1, saying the country's accession to the EU should speed up economic recovery. The advance to investment grade followed similar moves by Standard & Poor's in 2005 and Fitch Ratings in 2004.

Stable Outlook

Moody's said in its report today that Romania's rating outlook is stable because of slowing inflation, ``strong'' economic growth and ``significant economic restructuring of the past few years.''

The service said, though, it is ``concerned'' about the current-account deficit, which it expects to widen this year from about 10.3 percent of GDP last year.

Romania's central bank has cited wage increases, government spending, oil prices and other factors as main threats to its year-end annual inflation target this year of 4 percent, plus or minus one percentage point.

The International Monetary Fund warned government budget calculations overestimate revenue and underestimate expenses. The IMF said the budget deficit could widen to as much as 3.8 percent of GDP this year, exceeding EU limits and pressuring inflation.

`Insufficient' Plan

EU finance ministers also said in a ruling adopted in Brussels on March 27 that Romania's program to contain spending is ``insufficient and should be strengthened significantly,'' while the budget plan ``does not seem to provide a sufficient safety margin'' against breaching EU deficit rules.

Moody's said infighting between political parties in the ruling coalition adds uncertainty to fiscal policy this year.

The Liberal Party, led by Prime Minister Calin Tariceanu, and the Democratic Party, loyal to President Traian Basescu, have been increasingly fighting in public this year, prompting calls for early elections.

The Liberals have also threatened to oust the Democrats from the ruling coalition, a move that would make them more dependent in Parliament on the opposition Social Democrat Party or could trigger early elections.

To contact the reporter on this story: Adam Brown in Bucharest at abrown23@bloomberg.net .

Romania to reintroduce import VAT at customs for non-EU countries

The Romanian government has decided to reintroduce import VAT at customs for imports from non-EU countries for a fixed period, government spokesperson Camelia Spataru announced on Wednesday.

The measure will come into force on April 15, 2007, and last until the end of 2008, Spataru said.

"The measure will not affect those importers who brought in significant imports and met the criteria to be granted a VAT-postponing certificate in 2006," she said.

The decision was made as the National Agency of Fiscal Administration found that fiscal evasion was on the increase since the country suspended import VAT for non-EU countries in January 2007.

According to a report issued by the Finance Ministry, 40 percent of the imports of vegetables, fruits and flowers from non-EU countries were not declared at customs.

The Romanian government will also require guarantee of import VAT at customs until a proof is presented that the goods were delivered to another EU country.

Spataru said the measure is being taken as "there is a risk that VAT-exempted goods supposed to be delivered to a EU country do not reach their destination but are placed on the black economy."

According to the Permanent Representation of Romania to the EU, 15 out of the 27 EU countries currently apply the system of import VAT at customs. Out of the ten countries that acceded to the EU in 2004, Estonia, the Czech Republic and Lithuania are currently applying the simplified payment system.

Hungary used the simplified VAT payment system at the accession date, but later suspended it for the same reasons Romania did.

Source: Xinhua

Wednesday, March 28, 2007

Romania and Bulgaria step up their games

Author: Polya Lesova, MarketWatch

The executive, head of strategy at Romania's state-controlled power-grid operator Transelectrica, was sitting in the lobby of New York's Waldorf-Astoria Hotel, taking a short break from meetings with American investors to promote the attractions of the European Union's latest entrant.

"The Bucharest Stock Exchange is very small, but in terms of returns you can make much higher margins than in developed markets," he said. As a result, "the visibility of Romania among international investors has increased."

Purdila's own company is a case in point. Transelectrica, which has a market capitalization of about 1 billion euros ($1.33 billion), floated 10% of its shares on the Bucharest Stock Exchange last August. Its stock price has since tripled.

Small wonder, then, that Purdila brushed aside questions about the country's failure to implement important reforms or the deepening political crisis caused by tussles between members of the government.

"In Romania, the market is less and less dependent on the political situation," Purdila said. "This is not to say that there aren't certain tensions, that we're not preoccupied. Electricity, however, is not political."

Dragos Simion, vice president of Romanian technology retailer Flamingo International, agreed: "The issue with politics is something that creates noise." But now that Romania is part of the E.U., domestic politics are no longer a dominant issue, he said.

"Romania is no worse than any other Central or Eastern European country. There may be problems with corruption or the judiciary, but they are not bigger than in other countries," he said.

Toughing it out

With a population of 22 million, Romania joined the E.U. on Jan. 1, together with neighboring Bulgaria, both countries having overcome misgivings in Brussels about their preparedness. The pair were allowed into the 27-member trading bloc on the condition that they step up efforts to fight corruption, reform judiciaries and improve administrative capacities.

The two countries are eligible for large amounts of E.U. structural funds, which could significantly improve development, especially in infrastructure.

That's not the only benefit.

"As new entrants into the E.U., both Romania and Bulgaria will most probably benefit from an increase in foreign direct investment," said Adrian Ciocoi, the Romania-based head of research for the emerging European markets at the Riedel Research Group.

That was certainly the case when Poland, the Czech Republic and Hungary joined the union in 2004. Foreign direct investment in Poland, for example, rose to 9.7 billion euros that year from 3.8 billion euros in 2003.

Fast-growing sectors like information technology, real estate, financial services and tourism offer abundant investment options in Romania and Bulgaria.

"There are many opportunities and not enough capital to fund them," said Valeri Petrov, the director in Bulgaria for Global Finance, which manages more than $850 million in private-equity investments in Greece, Bulgaria and Romania.

Bulgaria has received 7 billion euros of foreign direct investment in the last three years, Petrov said. Real estate is popular and generates huge returns in the region, growing at 30% to 40% annually, he said.

And Bulgaria as a whole, with about 8 million people, has been expanding fast: GDP rose 6% in 2006 and is expected to grow at a 5.4% pace in 2007.

Romanian economic growth is robust, as well. The economy expanded by 7.7% last year. The Economist Intelligence Unit is expecting GDP growth of 6.4% in 2007.

The level of convergence between Romania and Bulgaria and the E.U. is still lower than in other Central and Eastern European countries, said Vladimir Milev, financial analyst for the Metzler/Payden European Emerging Markets Fund.

However, "strong economic growth, discounted valuations and rapidly developing markets [mean] the two countries provide some good investment opportunities," he said.

"Apart from liquidity, the level of investor communication and overall corporate governance could improve, but with the recent E.U. accession we are optimistic about the future of these markets."

In Romania, Milev's fund has its greatest exposure to banks, such as the Romanian Development Bank; Banca Transilvania; and the country's largest bank, Banca Comerciala Romana, which is majority-owned by Austria's Erste Bank

Low liquidity, particularly in Bulgaria, is a problem. As a result, foreign investors can capture growth in these countries by investing in companies listed elsewhere that have exposure to the region. For example, investors can buy stock in Austrian oil company OMVor Czech utility CEZ, both of which have acquired assets in Bulgaria and Romania.

Cloudy short-term outlook

Still, even with their economies are on a growth path, the short-term outlook for Romania and Bulgaria is murky. Both have big current-account deficits and have further to go in implementing reforms.

"Ratings of the two E.U. newcomers, Bulgaria and Romania, seem to be a bit too positive, given the underlining fundamentals in the two countries," said Lars Christensen, senior analyst at Denmark's Danske Bank.

The outlook is most negative for Romania: "We would expect a downgrade of Romania's sovereign-debt rating from at least one of the rating agencies, most likely Fitch," he said.

Bulgaria, which overturned its communist government in 1989 only to re-elect communists under a new name a year later, lagged in the area of economic reform in the early years of transition. The country was plunged into an economic crisis in 1997 from which it is still recovering.

Reforms implemented in the late 1990s succeeded in stabilizing the currency, the lev. As a result, the country's ratings have dramatically improved over the last decade. The key fiscal risk to the country right now is the current-account deficit.

The governing coalition is a hodgepodge of parties led by a socialist prime minister, but it has managed to function, unlike the government in Romania, which is in the midst of a multifaceted political crisis.

"Bulgaria has made tremendous progress since 1997," Christensen said. "I'm much more doubtful about Romania. The political situation has deteriorated quite dramatically. Going into the E.U. is what's keeping things afloat."

The feud between Romanian President Traian Basescu and Prime Minister Calin Tariceanu, who have been sharing power in the coalition government, has slowed down the fight against corruption as well as much-needed reforms in the public-administration and justice systems.

"There are a tremendous number of reforms that need to be implemented," said Jon Levy, an analyst at the Eurasia Group. "You have a loss of steam now that Romania is in the E.U.

‘Legal’ spies

Romania’s foreign espionage agency acted legally when it tapped phone calls by foreign and Romanian suspects, a parliamentary commission said yesterday. The commission investigated allegations of improper tapping after the former head of the Foreign Intelligence Service, Claudiu Saftoiu, revealed the agency tapped phones with permission from prosecutors, instead of a judge’s warrant as required by law. (AP)

Romania: Several funding programs fail Brussels test

28 March 2007

Romania should start EU programs to deliver structural funds as early as this year, but in order to run them the programs must be conceived by Romanian authorities and approved by the European Commission, ACT Media news agency reports.


Obtaining EU approval, however, is not an easy task: three out of seven programs developed so far have been sent back to Bucharest to be redrawn, the head of the Phare interim team boss of the EC delegation to Bucharest Georgio Ficarelli has said.

The returned programs refer to competitive growth, transports and regional development, according to the source.Ficarelli told EurActiv.ro that one cause for which the programs were sent back is their complexity. Another is that certain components have overlapped, which must be avoided.

The four programs still under EC analysis will start this summer or in October this year, if all goes well in their case.

Source: ACT Media News Agency

Romania: BCR bonds to be sold on stock market

28 March 2007

Bonds issued by the Romanian Commercial Bank in November 2006 worth 242 million lei due on 28 November 2009 will be sold at Bucharest Stock Exchange (BVB) on Thursday, BVB informs.

BCR bonds will be sold in the Credit title sector in the second category of corporate bonds with the symbol BCR09. In November 2006 BCR issued 2,428,278 bonds with a nominal value of 100 lei. The interest rate will be paid on a semester basis and the interest rate is 7.25%.

The public sale offer for BCR bond sale was between 8-21 November. The overall value of the issue was 200 million lei, with the possibility of going up to 575 million lei. The bond issue was carried out through BCR Securities brokerage house and of BCR units. BCR attracted 242.8 million lei (69.181 million euros), according to data communicated by the bank. The bank announced it intended to use the money attracted through this issue for the increase of the amounts offered as credit both to the population and companies, according to the shareholders’ decision.

The BCR bond issue was over subscribed in a proportion of 121.4% and of the 2428 million bonds 98.63% were subscribed by juridical persons while 1.3% were subscribed by natural persons. More than half (56.9%) of the subscription volume was achieved by Romanian and foreign banks, a third (32.9%) by insurance companies and 5.6% by investment funds. Two thirds (66.46%) of bonds were subscribed by non-resident investors. The bond issue was quoted with A minus by Fitch Ratings and with BBB minus by Standard & Poor’s.

In 2005 BCR issued Euro bonds which attracted 500 million euros with an annual interest rate of 3.75%. The BCR issue was intermediated by ABN Amro and BNP Paribas and benefited from good launch qualifications from international rating agencies : BB – from Standard& Poor’s and BB from Fitch. BCR Euro bonds of the senior notes type have a three year maturation, an issue profitability of 4% annually and a fix annual coupon rate of 3.75%.

In 2005 BCR also launched two successive union loans in the international market for over 620 million dollars – the forst in March for 200 million dollars, the second in August of over 400 million dollars, of which it paid back the first loan. BCR also launched 26 issues of municipal bonds and five corporate bonds at BVB.

Source: ACT Media News Agency

Romania:Political turmoil generates reserve amid Stock exchange investors

28 March 2007

Political incertitude and eventual Government's restructuring generate reserve among investors on Bucharest Stock Exchange (BVB), appreciate analysts on the capital market, ACT Media news agency reports.

The first trading session this week was remarked through a low liquidity, almost to this year minimum (8.09 million euros), at a volume of 16.8 million shares. All exchange indicators were affected by corrections, and the most drastic decline was suffered by Financial Investment Companies (SIF) shares, with average losses of 3.11 percent.

Capital market analysts say the drop in financial sector was due to sustained increases that appreciated BET - FI Index by 8.5 percent last week and to incertitude on the political scene, as well.Adrian Barbulescu, trader with Prime Transaction, says that a more accentuated withdrawal from the market of buyers especially in the second part of the session was remarked, coinciding with information from the political scene as regards an eventual restructuring of the Government.

Investors failed to reverse the trend until the end, so that the overall value of exchanges on all markets stood at just nine million euros.SIF shares trading amounted on Monday at more than 15 million lei (4.5 million euros), accounting for some 55 percent of the entire trading.
The most transacted title was SIF Oltenia (SIF 5), with a total of 5.25 million lei (1.5 million euros). The biggest decline was registered by SIF Moldova titles (SIF 2) and SIF Muntenia (SIF 4) that lost 3.87 percent each.In the banking sector, two titles (Romanian Bank for Development - Groupe Societe Generale and Transilvania Bank) saw a negative evolution. As such, BRD shares concluded at 21.8000 lei/title (1 euro = 3.3 lei), a reduction of 1.36 percent from the previous session.Reductions did not circumvent the oil sector either. Whereas the shares of the National Oil Company (SNP) Petrom remained at the same value as the one concluding last week, 0.5800 lei/title, Rompetrol Rafinare Constanta (RRC) shares dropped more than two percentage points.

Source: ACT Media News Agency

Romania: Romania to export heavy equipment up to 19.6 mil euros

28 March 2007

In 2006, Romania exported to Germany heavy equipment worth 19.6 million euros, jumping 66 percent from 2005.

Germany is one of the main trade partners of Romania in the heavy industry, due to the high performance parameters of the equipment certified EN ISO 9001.

The Romanian exports of components were worth 14.2 million euros in 2006, and those of equipment segment 5.4 million euros.
The German imports of heavy equipment from Romania in 2006 accounted for 0.8 percent vs. 0.5 percent in 2005. Like in previous years, Romania will enter this year the heavy equipment fair in Hanover, due over Sept. 17-22.

Source: ACT Media News Agency

Romania:BNR estimates average annual interest rate to drop to 5%

28 March 2007

BNR anticipates that the average annual inflation rate will drop to 5% as against 6.5% registered at the end of 2006, ACT Media news agency reports.

'Statistic evaluations indicate a consolidation of the disinflation process which is provisioned to reflect in the reduction of the average annual inflation rate to the level of 5% in the following period,' shows a press release of the BNR Administration Board. BNR shows that the analysis of recent evolutions in macro economic and monetary fields shows the maintenance of the disinflation process on a trajectory consisting in reaching the inflation target of 4% this year with a variation of plus/minus 1%.

'The annual inflation rate has reduced quicker than anticipated, being 3.81% in February as against 4.01% the previous month, 4.87% in December 2006 and 8.49% in February 2006. The average annual inflation rate dropped to 5.8% in February from 6.56% in December 2006 and 9% in February 2006,' shows a BNR report.

The BNR Administration Board reduced by 0.5% the monetary policy interest rate to 7.5% per year, after cutting 0.75% points in the 9 February meeting, reducing the interest rate from 8.75% to 8% per year. BNR reminds that economy had a high growth rate of 7.7% backed by a robust investment increase and to a smaller extent, by consumer expansion, while the persistent demand excess has determined the deepening of current account deficit.

The central bank maintains stand about exerting cash control adequate to conditions in financial markets by means of market operations.
At the same time, the BNR Administration Board decided to maintain the present level of minimal compulsory reserves – 40% for foreign exchange reserves and 20% for lei reserves.

Source: ACT Media News Agency

EMERGING MARKETS REPORT: Newest E.U. Members Bulgaria And Romania Step Up Their Games

NEW YORK (Dow Jones) -- Razvan Purdila was having a hectic day.

The executive, head of strategy at Romania's state-controlled power-grid operator Transelectrica, was sitting in the lobby of New York's Waldorf-Astoria Hotel, taking a short break from meetings with American investors to promote the attractions of the European Union's latest entrant.

"The Bucharest Stock Exchange is very small, but in terms of returns you can make much higher margins than in developed markets," he said. As a result, "the visibility of Romania among international investors has increased."

Purdila's own company is a case in point. Transelectrica, which has a market capitalization of about 1 billion euros ($1.33 billion), floated 10% of its shares on the Bucharest Stock Exchange last August. Its stock price has since tripled.

Small wonder, then, that Purdila brushed aside questions about the country's failure to implement important reforms or the deepening political crisis caused by tussles between members of the government.

"In Romania, the market is less and less dependent on the political situation, " Purdila said. "This is not to say that there aren't certain tensions, that we're not preoccupied. Electricity, however, is not political."

Dragos Simion, vice president of Romanian technology retailer Flamingo International, agreed: "The issue with politics is something that creates noise." But now that Romania is part of the E.U., domestic politics are no longer a dominant issue, he said.

"Romania is no worse than any other Central or Eastern European country. There may be problems with corruption or the judiciary, but they are not bigger than in other countries," he said.

Toughing it out

With a population of 22 million, Romania joined the E.U. on Jan. 1, together with neighboring Bulgaria, both countries having overcome misgivings in Brussels about their preparedness. The pair were allowed into the 27-member trading bloc on the condition that they step up efforts to fight corruption, reform judiciaries and improve administrative capacities.

The two countries are eligible for large amounts of E.U. structural funds, which could significantly improve development, especially in infrastructure.

That's not the only benefit.

"As new entrants into the E.U., both Romania and Bulgaria will most probably benefit from an increase in foreign direct investment," said Adrian Ciocoi, the Romania-based head of research for the emerging European markets at the Riedel Research Group.

That was certainly the case when Poland, the Czech Republic and Hungary joined the union in 2004. Foreign direct investment in Poland, for example, rose to 9.7 billion euros that year from 3.8 billion euros in 2003.

Fast-growing sectors like information technology, real estate, financial services and tourism offer abundant investment options in Romania and Bulgaria.

"There are many opportunities and not enough capital to fund them," said Valeri Petrov, the director in Bulgaria for Global Finance, which manages more than $850 million in private-equity investments in Greece, Bulgaria and Romania.

Bulgaria has received 7 billion euros of foreign direct investment in the last three years, Petrov said. Real estate is popular and generates huge returns in the region, growing at 30% to 40% annually, he said.

And Bulgaria as a whole, with about 8 million people, has been expanding fast: GDP rose 6% in 2006 and is expected to grow at a 5.4% pace in 2007.

Romanian economic growth is robust, as well. The economy expanded by 7.7% last year. The Economist Intelligence Unit is expecting GDP growth of 6.4% in 2007.

The level of convergence between Romania and Bulgaria and the E.U. is still lower than in other Central and Eastern European countries, said Vladimir Milev, financial analyst for the Metzler/Payden European Emerging Markets Fund (MPYMX) .

However, "strong economic growth, discounted valuations and rapidly developing markets [mean] the two countries provide some good investment opportunities," he said.

"Apart from liquidity, the level of investor communication and overall corporate governance could improve, but with the recent E.U. accession we are optimistic about the future of these markets."

In Romania, Milev's fund has its greatest exposure to banks, such as the Romanian Development Bank; Banca Transilvania; and the country's largest bank, Banca Comerciala Romana, which is majority-owned by Austria's Erste Bank (EBKOF) .

Low liquidity, particularly in Bulgaria, is a problem. As a result, foreign investors can capture growth in these countries by investing in companies listed elsewhere that have exposure to the region. For example, investors can buy stock in Austrian oil company OMV (OMVKY) or Czech utility CEZ, both of which have acquired assets in Bulgaria and Romania.

Cloudy short-term outlook

Still, even with their economies are on a growth path, the short-term outlook for Romania and Bulgaria is murky. Both have big current-account deficits and have further to go in implementing reforms.

"Ratings of the two E.U. newcomers, Bulgaria and Romania, seem to be a bit too positive, given the underlining fundamentals in the two countries," said Lars Christensen, senior analyst at Denmark's Danske Bank.

The outlook is most negative for Romania: "We would expect a downgrade of Romania's sovereign-debt rating from at least one of the rating agencies, most likely Fitch," he said.

Bulgaria, which overturned its communist government in 1989 only to re-elect communists under a new name a year later, lagged in the area of economic reform in the early years of transition. The country was plunged into an economic crisis in 1997 from which it is still recovering.

Reforms implemented in the late 1990s succeeded in stabilizing the currency, the lev. As a result, the country's ratings have dramatically improved over the last decade. The key fiscal risk to the country right now is the current-account deficit.

The governing coalition is a hodgepodge of parties led by a socialist prime minister, but it has managed to function, unlike the government in Romania, which is in the midst of a multifaceted political crisis.

"Bulgaria has made tremendous progress since 1997," Christensen said. "I'm much more doubtful about Romania. The political situation has deteriorated quite dramatically. Going into the E.U. is what's keeping things afloat."

The feud between Romanian President Traian Basescu and Prime Minister Calin Tariceanu, who have been sharing power in the coalition government, has slowed down the fight against corruption as well as much-needed reforms in the public- administration and justice systems.

"There are a tremendous number of reforms that need to be implemented," said Jon Levy, an analyst at the Eurasia Group. "You have a loss of steam now that Romania is in the E.U."

Romania: EBRD to invest about 50 mil euros in local real estate

27 March 2007

The European Bank for Reconstruction and Development (EBRD) might invest at least 50 million euros or 25% of shares of North Real Estate Opportunities to finance real estate projects in Romania and other East European countries, ACT Media news agency reports.

The projects has in view to purchase, develop, renovate and manage real estate in Romania, Moldova, Bulgaria and Ukraine. The fund could make strategic investments in Serbia, Croatia, Macedonia, Kazakhstan, Georgia and Montenegro. If it invests through purchases, the fund will support setting up a secondary institutional market for existing properties, a market not existing in the whole area. Overall costs of the project are confidential.

The EBRD Board will meet on 17 April to make a decision about the project. Investment funds will activate in the market as buyers and co-developers, while developers will be more and more interested in Partnerships, as real estate leasing does not finance large projects and bank credits are more and more expensive, according to a recent report of Richard Ellis company.

According to its analysts, Romania will remain one of the most interesting markets in Central and Eastern Europe, both for institutional and private investors. There will be a rise of transactions with projects before the completion of works, to the detriment of those with completed buildings, investors trying to ensure the best profits, while prices are growing. EBRD could credit a special investment vehicle of companies Globe Trade Center and Aura Investment meant to purchase, manage and develop commercial centers in Romania. North Real Estate Opportunities investment fund will purchased European Retail Park Sibiu for 83 million euros.

The British investment fund North Real Estate will invest 60 million euros for the development of Bucovina commercial centre in Suceava. North Real Estate Opportunities Fund Ltd. is a British investment company based on Guernsey island, dealing with the purchase of commercial areas in Central and Eastern Europe, controlled by North Asset Management, The fund is listed in the alternative investment market at the London exchange and has office in London and Bucharest.

Source: ACT Media News Agency

Governing coalition in Romania near collapse

BUCHAREST: Less than three months after Romania joined the European Union, the facade of good behavior and unity of its politicians has crumbled and the governing alliance is on the verge of collapse.

On Monday, Prime Minister Calin Popescu-Tariceanu declared that the country was "witnessing the death" of the center-right governing coalition.

On Tuesday, Justice Minister Monica Macovei, whose battle against corruption helped Romania press its way into the EU on schedule on Jan. 1, confirmed that her job was on the line if the government was reshuffled, as is expected.

"I feel good about the work I did," she said in an interview at her ministry office. "People say I was naive not to expect it. I didn't expect it to happen so soon."

Local analysts said a reshuffle could take place as early as Wednesday.

Political tensions have escalated sharply here since President Traian Basescu phoned in to a live television appearance by the prime minister last month and accused him of lying.

The two men have been at odds since the summer, when Popescu-Tariceanu said he wanted to pull Romania's troops out of Iraq, and Basescu disagreed. Last week, a parliamentary commission dominated by the opposition recommended that Basescu be impeached for alleged constitutional violations.

The conflict - seen by analysts as demonstrating that Romania has reverted to Balkan politics as usual now that it is safely in the European club - has impeded the business of government.

Romania has been without a foreign minister since Mihai Razvan Ungureanu resigned last month and Popescu-Tariceanu's nominee to replace him was blocked by Basescu. The diplomatic impasse has left the country with no ambassadors in important capitals, among them London, Paris and Washington.

Legislative work has also seized up. For the last month, the governing coalition between the president's Democratic Party and the prime minister's Liberal Party has been in a parliamentary deadlock, refusing to sign each other's decrees and legislation.

The fate of Macovei in particular is being monitored closely in Brussels, where she is widely respected as an independent and vigilant voice who has helped Romania to tackle graft and come to terms with its past.

"I think this is very damaging for our credibility in Europe and the world," said Mircea Geoana, president of the opposition Social Democratic Party, the largest party in the Romanian Parliament. Basescu, he said in an interview, "wants to take more power than the constitution gives him."

Geoana denied reports that he might be entering negotiations about possible participation in a new cabinet.

The open and personal confrontation between the president and prime minister has provided grist for the media - and popular discussion - for months. But some analysts see the divide as stemming not from personalities but from a deeper flaw in Romania's political system.

"It's not a psychological conflict," said Dorel Sandor, director of the Center for Political Studies and Comparative Analysis, a research organization in Bucharest. "It's an institutional incompatibility."

IHT

Romanian reformer faces sack after clash

By Christopher Condonin Budapest

Published: March 27 2007 03:00

Monica Macovei, the Romanian justice minister credited with cleaning the country up before it joined the European Union, is facing the sack after clashing with members of the cabinet.

Calin Tariceanu, Romania's prime minister, has hinted that he may dismiss his government's most prominent reformer for refusing to co-operate with the rest of the cabinet. Any decision would be closely scrutinised in other parts of the EU, where her reforms are held in high regard.

"Every minister has to take into consideration the very basic principle of government solidarity," Mr Tariceanu told the Financial Times. "This is true of Minister Macovei. We cannot make exceptions."

It is not clear whether the prime minister wants to sack her over the thrust of her anti-corruption efforts or because of her unwillingness to compromise. Ms Macovei, a political independent, has repeatedly clashed with parliament over a wide range of anti-corruption measures.

"She does not know how to pick her battles," said one official close to the prime minister.

Ms Macovei won plaudits throughout the EU for championing judicial reform and anti-corruption efforts; her clean-up was seen as a key to Romania's winning membership of the EU. But there is concern that reform has stalled since November, when Romania received the green light to join the union.

Previous moves against Ms Macovei have drawn a sharp reaction. In February, after Romania's Senate passed a motion calling for her removal, Franco Frattini, the EU's justice and home affairs commissioner, expressed his support for her. And Susanne Kastner, deputy speaker of Germany's Bundestag, said dismissing Ms Macovei could trigger one of the "safeguard clauses" in Romania's EU accession treaty, allowing for penalties if promised reforms were not achieved.

However, people in Brussels accept it might now be time for "the hero of Romanian accession" to step aside if she had lost the confidence of the prime minister and president.

What matters, they say, is that she be replaced by someone seen as having the credentials to steer her reforms through a hostile parliament.

"It is not about individuals, but about necessary reform of the judiciary and the fight against corruption," a spokesman for Mr Frattini said.

Ms Macovei's dismissal would be a potentially unpopular move for the prime minister.

Aware that her sacking could provoke a storm, Mr Tariceanu portrayed his government's achievements as the result of a combined effort by his entire cabinet, not by any individual ministers.

"The efforts of a single person are not enough if they are not backed by the whole government, including the prime minister," he said.

A spokeswoman for Ms Macovei said the justice minister had simply insisted on upholding the law, and that the prime minister should punish instead those who sought to break the law.

Unassuming, devoted medical examiner among fixtures in Smith case

MATT SEDENSKY

Associated Press Writer

DANIA BEACH, Fla. — Tearful judges came and went. Lawyers have ended their representation. One of the only constant faces throughout the Anna Nicole Smith saga has been the kindly medical examiner with a thick Romanian accent and a devotion to determining what killed the starlet.

Dr. Joshua Perper was thrust into the spotlight like never before when the pinup died in his county. He has been a fixture in exhaustive media coverage of the story, opening his office to reporters and submitting himself to relentless questioning.

He gave so many interviews he said it felt like he had a second job.

"I and my office do not seek publicity, for sure, and don't run away from publicity," he said in an interview in his office. "I believe the medical examiner has a responsibility of explaining to the public why he or she makes certain decisions."

Smith's image — her sometimes slurred speech, her fluctuating weight, her over-the-top antics — made the model and reality TV star an easy target in her life. But Perper said he approaches all cases with dignity for the dead and their family.

He said each case teaches him something, too, though he said he tries not to get emotionally involved in his work.

"You cannot run away from your person. You are your person all the time, but I don't think it affects us emotionally, because what we are dealing with is a medical person and every death is a medical person," he said. "The human mind is always stimulated when there's a problem, so you want to find out what's the truth."

Perper is a 74-year-old widower who was born in Bacau, Romania, schooled largely in Israel, and has been at the helm of the Broward County Medical Examiner's Office since 1994. He beams when he talks about his three children and seven grandchildren, he sometimes inserts wry asides into otherwise staid discussions, his office shelves are not only filled with medical texts, but audiobooks by authors as varied as Bill Clinton, John Grisham and Jack Kerouac.

The medical examiner not only has a medical degree and one in forensic pathology, but also a law degree. Before coming to Florida, he spent a dozen years working in the coroner's office in Allegheny County, Pa. He has taught extensively, received numerous awards, testified on Capitol Hill and written for many journals and books.

Smith's case is not the first high-profile one to come before him. In 2003, he found the diet supplement ephedra contributed to the heatstroke that killed Baltimore Orioles pitcher Steve Bechler. Eight years earlier, he determined that 17-year-old model Kristen Taylor's asthma death may have been aggravated by her use of an over-the-counter inhaler.

Nothing, though, has compared to this. It was evident by the hordes of media who encircled Perper on Monday, as he stood behind a podium on two cinder blocks to announce Smith died of an accidental drug overdose.

For all the hours he has devoted to the Smith case in the last six-plus weeks, Perper said the demands for his time weren't too great.

"This kind of stress I can handle," he said. "I do not need to decompress. I'm not compressed. In other words, if I decompress, I'm going to deflate."

Perper has continued his work on all manner of other cases as the world has watched him give word on the Smith case. He has no plans for time off.

"Life goes on," he said. "This was just a blip."

Ukraine, Moldova and Romania agreed to cooperate

Today in Odesa the General Prosecutors of Ukraine, Romania and Moldova have signed trilateral agreement on cooperation.

According to the General Prosecutor’s Office of Ukraine, the agreement is signed by Olexander Medvedko the Ukrainian Prosecutor, Valeriy Gorbul the Moldavian Prosecutor and by Laura Kovesi the Romanian Prosecutor.

“This agreement is aimed at cooperation of our General Prosecutor’s offices for the benefit of Ukraine, Moldova and Romania,” Medvedko said. The document contributes to strengthening of cooperation between judicial systems of three countries.

The Prosecutor of Romania Laura Kovesi noted that this agreement will contribute to mutual help and will lead todecrease of boundary criminality

ForUm

Romania May Benefit From Slower Euro Path - Central Banker

Tue, Mar 27 2007, 13:01 GMT
http://www.djnewswires.com/eu

Romania May Benefit From Slower Euro Path - Central Banker

PRAGUE (Dow Jones)--Romania plans to enter the exchange rate mechanism in 2012, as a prelude to joining the euro, thereby gaining time to push through necessary domestic reforms and also allowing its own currency to achieve a viable rate against the single currency, the deputy governor of the National Bank of Romania said Tuesday.

With low debt and a modest budget deficit, Romania could plausibly push for earlier adoption of the euro.

But successful entry into the euro area will require reforms and "we need the time to carry that out," Deputy Governor Cristian Popa said at a conference in Prague.

Maintaining monetary and foreign exchange flexibility - which would be significantly surrendered if Romania were to join the ERM2 system for aspiring euro area members - should help execute structural reforms such as making labor markets and the whole economy more flexible, Popa said.

Just as important, waiting until 2012 will allow for the massive inflows of foreign direct investment into Romania to be digested and provide a sustainable reading of the country's natural currency rate.

It will "provide the possibility of setting a central parity rate based on a more accurate estimate of the equilibrium rate after overcoming the peak in capital inflows," Popa said.

Last year, Romania recorded around EUR8 billion in foreign direct investment, covering around 90% of its current account deficit, which exceeded 10% of gross domestic product. Responding to that inflow of funds, the Romanian leu was one the world's best-performing currencies, rising 10% against the euro in 2006.

The question of the currency rate at which prospective members join the euro has taken center stage in the past month, as highlighted by Slovakia's central bank decision to revalue its central parity rate by 8.5% earlier this month. Slovakia is a member of ERM2, which requires that local currencies be kept within a trading range against the euro.

Tuesday, Slovakia's central bank cut its main interest rate by 25 basis points to 4.5% in a bid to cool off the Slovak koruna's gains.

The night before, for similar reasons, the National Bank of Romania also slashed rates, taking its main lending rate down by 50 basis points to 7.5% from 8.0% after having cut by 75 basis points in February.

"The 50-basis point cut was partly to squelch speculative investors," Popa said.

Fast-growing economies may suffer imbalances if they link to the euro prematurely, as suggested by Latvia, which last year posted a current account deficit of more than 20% of GDP. Popa noted that Bulgaria, which joined the European Union this year with Romania but also has a currency board arrangement linking its currency to the euro, had a current account deficit of around 16% of GDP.

Popa said the large deficits may not be cause for alarm so long as they are being fueled by foreign direct investment, which tends to boost productivity and also constitute equity rather than debt that needs to be financed.

-By Christopher Emsden; Dow Jones Newswires; chris.emsden@dowjones.com; +39 348 861 9789

Romania urged to rein in public spending

EU finance ministers warned Romania to do more to curb overheating as its economy rapidly grows.

EU Economic and Monetary Affairs Commissioner Joaquin Almunia said Tuesday that Romania needs to rein in public spending, echoing a similar warning from the International Monetary Fund that said the government should cut back on expenditure to lower inflation. Wages have soared in Romania as a result of labor shortages.

"We have sent a message to the Romanian authorities that the overheating of the economy requires more strict fiscal policies," Almunia said. "They have not been strict in correcting the budgetary imbalances and ... contributing to the sound policy mix that the Romanian economy requires."

He spoke after the monthly EU finance ministers meeting.

The ministers backed an EU warning to the Romanian government that deficits could run higher than its own forecasts if it overspends. The EU also recommended that more be done to pay off debt as Romania enjoys high growth.

Romania, which joined the EU on Jan. 1, has enjoyed rapid growth since 2001, after years of recessions and restructuring of heavy industries in the 1990s.

The economy expanded by 7.7 percent in 2006 compared with a year earlier, the national statistics institute has said.

The IMF has warned that GDP growth would slow to about 7 percent in 2007 and that inflation could grow to 5.5 percent unless the government tightened its spending.

Wages have been rising as the country experiences labor shortages, worsened by people leaving to find work in other, better-paid parts of Europe.

Annual inflation slowed to 4.87 percent in 2006 from 8.6 percent in 2005, and continued to slow in January to 4.01 percent.

The International Monetary Fund also urged Romania to increase its flat tax, which is now 16 percent, to reduce the budget deficit to under 1 percent. The government predicted a budget deficit of 2.8 percent of gross domestic product this year -- scraping under an EU limit of 3 percent -- but the IMF says the target could be exceeded due to higher public wages.

Associated Press

Unilever Moves Bulgarian Production Facilities to Romania


27 March 2007, Tuesday

Consumer products giant Unilever said on Tuesday it would close down its margarine and mayonnaise plant in the Bulgarian town of Dobrich, moving the production of the Kaliakra brand to Romania.

The move will make 100 of Unilever's employees redundant, but the company said adequate compensation packages would be provided.

The relocation is part of the company's strategy to concentrate production in locations that offer the best prospects for future development.

Even though production will be moved to Ploiesti, in central Romania, the Kaliakra brand, one of the best-known in Bulgaria, will not be discontinued, company officials said.

Unilever opened the Ploiesti facility in December to serve as the nexus of its production capacities in the region.

Unilever Bulgaria, which had a turnover EUR 20 M last year, is part of Unilever's South Central Europe division, headquartered in Bucharest.

The regional division oversees operations in Romania, Bulgaria, Serbia, Montenegro, Macedonia, Moldova and Albania, and had a turnover of EUR 175 M in 2005.

Tuesday, March 27, 2007

Romania refuses to be rushed on euro entry

von Christopher Condon

Romania, which has seen a big increase in interest from foreign portfolio investors on the back of EU membership, wants to avoid the scenario lately seen in Hungary.

Romania will resist European Central Bank exhortations to bring forward its target date for adopting the euro, opting instead for a more cautious path towards the single currency, according to the country's central bank governor.

Mugur Isarescu told the FT that while Romania, which joined the European Union in January, was on course to meet the Maastricht criteria for eurozone membership earlier than expected, he was keen to avoid rushing ahead until "real convergence" had occurred.

"Euro adoption seems like a simple decision, but it is a complicated one, and we have to balance being ambitious with being realistic."

He said Romania, which has seen a big increase in interest from foreign portfolio investors on the back of EU membership, wanted to avoid the scenario seen in Hungary where the central bank has twice been forced to abandon its target dates for joining the eurozone. Those delays angered investors and undermined the Hungarian currency.

Mr Isarescu recounted with satisfaction a recent encounter with Jean-Claude Trichet, ECB president, who suggested that Bucharest's target for joining the euro in 2014 could be brought forward, asking: "Why are you not more ambitious?"

The Romanian answered that adopting the euro on the technical basis of the Maastricht criteria alone was dangerous.

"Speaking only of nominal convergence, Romania could reach it in the short term," he told the FT. "But without real convergence, [adoption of the euro] is clearly unfavourable for Romania."

To adopt the euro in 2014, Romania would have to comply with Maastricht and enter the so-called ERM II - the eurozone's waiting room - in 2012. But, as Mr Trichet recognised, the country is on course to comply in 2010 or 2011.

Public debt is now 18 per cent of gross domestic product, well below the Maastricht line of 60 per cent. The budget deficit for 2006 is likely to be about half the Maastricht limit of 3 per cent of GDP. Inflation is below 5 per cent and the central bank is targeting 2 per cent within three years, which would also comply. The bank's main interest rate is 8 per cent but if inflation falls towards 2 per cent, the rate would also fall.

However, Mr Isarescu said he worried about Romania's ability to sustain the criteria, especially the inflation mark, and about other threats to long-term financial stability, such as exchange rate volatility.

Structural reforms, he said, must also begin before euro adoption to remove fiscal uncertainties. He pointed to poor government budget management, as well as a need for pension, health and education reforms that would make long-term budget obligations more predictable.

ROMANIA, CROATIA AND BULGARIA COMPETITIVE DESPITE CURRENT ACCOUNT DEFICIT

Tue 27 Mar 2007

Bulgaria, together with Romania and Croatia experienced sufficient increase of its current account deficit, research of rating agency Fitch Ratings showed.

According to Fitch Ratings the increase of current account deficit shows higher domestic demand rather than competitiveness crisis in these countries.

Bulgaria's current account deficit reached 16.3 per cent of the country's GDP in 2006 while Croatia registered a deficit of 8.1 per cent and Romania 10.3 per cent, Bulgarian National Radio reported.

At the same time the three countries registered export growth as the average increase for Bulgaria and Romania for the period from 2000 to 2006 was 21 per cent annually and for Croatia- 12 per cent.

The trade deficits of the three countries also went up, the report said.

The increased current account deficit has to be funded through higher foreign capital inflow, Fitch Ratings said.

Bulgaria, Romania and Croatia are now funding their deficits through direct foreign investment. Yet their Gross Foreign Debt (GFD) keeps increasing in relation to the GDP.

February Witnesses Increases in Romania Car Sales

Car sales in Romania rose sharply in February. Sales of imported cars registered a jump of 74% whereas the sale of homemade cars dropped 18%.

Association of Automobile Producers & Importers of Romania says that the car sales in Romania increased from 14,887 to 18,704 in the month of February. The sale of imported cars increased 74% to 12,210 cars whereas the sales of locally made cars fell 18% to 6,494 units.

Sulfina Barbu, Romanian Environment Minister said, "Last month, that even after two years of soaring new-car sales, the average model in Romania is more than 13 years old". She added that the government would be extending a program, which will encourage the owners of cars, which are older than 12 years to buy new ones. In news published in
Bbj.Hu., Barbu said, "The government will give 3,000 lei ($1,160) to 16,500 owners of older cars this year to help them junk the vehicles and buy models that meet stricter emissions standards",

Many factors play a role in this rise in car sales: the appreciation of Leu (which resulted in lowering prices in lei, whereas the price of vehicles are expressed in Euro usually), introduction of flat income tax (which resulted in high net income for many), reduction in the loan interest rates, scrapping incentive (30 million Lei - around EUR 850 - to scrap an old car above 12 years of age and buy a new one).


The powerful economic growth and the increase in income have also played a role in increase in car sales in Romania. The car importers came out with more advertisements, publicity campaigns, and promotions which resulted in the growth of car sales in the country.

Research analyst at
RNCOS says that the automotive industry of Romania is not believed to be influenced by the slump in the local market, as Romanian car manufacturing would become progressively export-oriented.

Experts anticipate new challenges for the Romanian market in the year 2007. With the rising inflation, the interest rates are expected to hike and this can result in more pressure on the car market. EU accession, which is expected in the year 2007, might result in an increase in the growth of cheap used vehicles.