Thursday, April 30, 2009

Romania presidential runner says housing top issue

* Social Democrat head calls for housing programme
* Energy distribution, farm reform also key issues
* Wary of energy over-dependence on Russia

By Adam Cox and Justyna Pawlak
BUCHAREST, April 29 (Reuters) - Leftist presidential candidate Mircea Geoana called on Wednesday for a major housing programme in Romania that could also boost jobs and bolster a country forced to rely on massive aid from the IMF.

Geoana, leader of the leftist Social Democrats (PSD), also said he would push for a dramatic shift in the country's energy distribution system, a series of social infrastructure projects and long-overdue agricultural reform.

Seven months before Romania's presidential election, Geoana is running second in opinion polls, some 10 percentage points behind popular incumbent Traian Basescu. The PSD and centrist Democrat Liberals are partners in the government coalition.

Geoana said Romania, a relatively impoverished European Union state of 22 million, would need to avoid overinvestment in housing leading to too much supply. But he believes helping young people who currently have no access to credit to buy homes would benefit the crisis-hit economy in more ways than one.
"The most important (issue) is to maintain and create jobs," Geoana told Reuters in an interview at his party headquarters.

"That's why I believe the housing programme could really revive our construction sector which has been the driver of economic growth." As global turmoil enveloped eastern Europe, Romania turned in recent months from the EU's fastest-growing economy to a trouble spot that needed a 20 billion euro aid package led by the International Monetary Fund to prevent a financing crisis.

While powering the boom of recent years, construction and real estate investment have also worsened the country's economic imbalances that are now pushing it towards recession. Many people have been priced out of the housing market.

Surveys show Romania has a housing deficit of about 1 million apartments and the shortfall may need investment worth about 100 billion euros ($132.5 billion) over 25 years.

The next most important issue, Geoana said, was energy distribution. Romania had two conflicting issues: it needed a role as one of the region's energy players but at the same time it wanted to avoid becoming overdependent on Russia.

Lastly, Romania's fragmented farming sector needed to be consolidated -- an issue that has slowed the country's economic modernisation since the early days of the post-Communist era.

Romania has some 2 million individual farms, mostly tiny subsistence plots, employing 40 percent of the population. Yet it also imports more two-thirds of its agricultural needs.

Geoana said Romania needed to provide financial incentives so that more farm-owners joined forces and leased out farmland.

ENERGY DILEMMAS
Bucharest is already participating in the EU- and U.S.-backed Nabucco pipeline, a 9.7 billion euro project to pump gas from the Caspian region via Turkey, Bulgaria, Romania and Hungary to Austria to cut Europe's reliance on Russian supplies.

But Russia's gas monopoly Gazprom may want to coax Romania into joining its rival pipeline project, South Stream, which will run its gas from the Black Sea to southeastern Europe and is supported by Bulgaria and Italian firm ENI.

Bucharest has so far insisted on its support for Nabucco, though the project is wavering because of the EU's failure to line up supplies and reach political and financial agreement.

Asked whether he would be open to Romania participating in South Stream, Geoana would not be drawn but he signalled a willingness to look at a variety of options. Any decision would have to be taken not purely in terms of Romania's national interests but in a wider geopolitical context.

"It is clear the more we drag our feet, not only in Romania but on this Nabucco project, the pressure is increasing."

The country needed to see what the overall EU strategy would be with regard to gas supplies from Russia. "It's a power game."

He said that if a project rival to Nabucco included Western interests as well as Russia, Romania would be far more comfortable participating. "Nabucco is our first choice. Our second best solution would be a combination of Western and Eastern consortium (partners)... I am sensing we are getting closer to a strategic decision from Europe and from Russia." (Additional reporting by Radu Marinas) (Editing by Mark Trevelyan)

Romania runs Q1 budget deficit of 1.5 pct/GDP

BUCHAREST, April 29 (Reuters) - Romania recorded a consolidated budget deficit of 1.5 percent of gross domestic product in the first quarter of the year, as the world crisis slashed tax receipts, the finance minister said on Wednesday.

Preliminary data earlier this month had showed a first quarter shortfall of 1.56 percent of GDP. In the same period of last year, the European Union state ran a virtually balanced budget, with a surplus of 0.02 percent of GDP.

Romania has switched from being the EU's fastest-rising economy to one of its most vulnerable in just a few months, as its dependence on evaporating foreign cash exposed it to a potential financing crisis.
In March, it secured a 20-billion-euro, IMF-led aid package designed to underpin markets and pump fresh cash into the battered emerging economy.

While the money is conditional on a broad package of fiscal reforms, the IMF has allowed the centre-left government to target a deficit of 4.6 percent of GDP this year, under Romanian accounting standards -- 5.1 percent under EU methodology.

However, it has set quarterly budget gap ceilings, which must be met or face spending adjustments. For the first quarter, the target stands at roughly 1.6 percent of GDP.

"The consolidated budget deficit for the first three months stands at 7.92 billion lei ($2.51 billion), or 1.5 percent of GDP," Finance Minister Gheorghe Pogea said in a news conference.

Consolidated revenues were 38.06 billion lei, or 7.2 percent of GDP, down roughly 6 percent on the year, as the crisis hurt output and domestic demand. Spending totalled 45.99 billion lei. (Reporting by Luiza Ilie; Editing by Ron Askew)

Wednesday, April 29, 2009

Petrom sees 2009 profit slightly up from 2008

BUCHAREST, April 29 (Reuters) - Romania's top oil and gas firm Petrom (SNPP.BX) expects 2009 net profit to edge up to 1.1 billion lei ($345 million), the company said on Wednesday.

Petrom, majority owned by Austria's OMV (OMVV.VI), also said in a statement following its general shareholders meeting that it would not pay a dividend for 2008.

Last year, Petrom recorded a net profit of just over 1 billion lei, 43 percent lower than in 2007. Earning were hit mostly in the fourth quarter due to falling oil prices and a provision for legal claims of employees. (Reporting by Marius Zaharia; Editing by Dan Lalor) ($1 = 3.190 lei)

Romanian BRD to issue 600 mln euros debt in 2009-10

* To issue 600 mln euros debt

* To pay gross dividend of 0.72828 lei

(Adds analyst quote, background)

BUCHAREST, April 29 (Reuters) - Romania's second-largest bank, BRD (BRDX.BX), controlled by France's Societe Generale (SOGN.PA), plans to issue debt worth of 600 million euro ($792 million) this year and next, BRD said on Wednesday.

BRD also said it approved paying a gross dividend of 0.72828 lei ($0.228) for 2008, up 23 percent from a year before, a figure largely expected by the market.

"(We) approved ... to issue bonds during the 2009-2010 period of up to 600 million euros worth of lei or another currency," BRD said in a statement after the general shareholders' meeting.

Analysts said bond issuance plans were a sign the parent bank had switched off its tap with cash for the moment.

"It is a signal Societe Generale does not give BRD as much cash as it needs," said Ovidiu Fer, an analyst with Wood & Company in Prague.

"But this will not be perceived as negative by the markets as we are not talking about a high level of debt, which the bank can't afford."

BRD has posted a 46 percent rise in 2008 net profit to more than 1.35 billion lei, benefiting from large fee and interest income for most of last year, when Romania's economy was booming.

Despite a sharp reversal of fortune triggered by the global financial crisis, in which Romania is expected to face recession this year, BRD has said it still expects to record a profit in 2009.

BRD's shares were suspended from trading due to the general shareholders' meeting. (Reporting by Marius Zaharia; Editing by Dan Lalor and Andrew Macdonald) ($1 = 0.7579 euro) ($1 = 3.190 lei)

AP: Thousands of railway workers in Romania protest

Thousands of Romanian railway workers have protested against cutbacks that will lead to the loss of 12,000 jobs.Up to 8,000 railway workers from across Romania marched from Bucharest's main railway station to the government headquarters and back again. 

They delivered a letter demanding the government retains jobs and increases their salaries.The transportation ministry announced the job cuts earlier this year, in line with government spending cuts.The Romanian railway network employs about 80,000 people. Currently trains run at low speed because of old and poor-quality rails.

Romania to Freeze State Wages for Rest of This Year

By Adam Brown

April 29 (Bloomberg) -- Romania’s government will freeze state workers’ wagesfor the rest of this year, reversing an earlier decision for 5 percent increase in the second half.

The freeze will help the government meet the budget-deficit target agreed with the International Monetary Fund and the European Union, Prime MinisterEmil Boc said on his Web site today.

“When the government has the resources, we can talk about wage hikes,” Boc said. He also predicted international financing will help Romania avoid a recession this year, revising an earlier forecast of a 4 percent contraction.

Romania agreed last month to an international loan package led by the IMF and the EU of 20 billion euros ($27 billion) to help finance its current account and budget deficits.

As a condition of the IMF-led loan, the government must target a budget deficit of 4.6 percent of gross domestic product this year, from a gap of 4.8 percent last year. In 2008, the government raised state wages by an average of 20 percent.

Nicolaie Alexandru, senior economist at ING Bank Romania, said the wage freeze and other measures such as some tax increases will still leave the government with a budget deficit of 6.4 percent of GDP. The forecast was down from ING’s prediction last month of a year-end gap of 7.3 percent of GDP.

“The revenue projection remains optimistic while the cuts in expenditures are not enough to bring the budget deficit to 4.6 percent of GDP,” Alexandru wrote in an e-mailed note today.

To contact the reporter on this story: Adam Brown in Bucharest atabrown23@bloomberg.net

Romania's road network 'a shambles'

www.euractiv.com

Published: Tuesday 28 April 2009   

Romania has not built a single kilometre of new road since its January 2007 EU accession, EurActiv Romania writes today. The total length of the country's motorway network, which has a reputation for poor surfaces, is only 53 km. In contrast, Belgium has 1,763 km of motorways.

Background:

Romania is ranked second last in the EU for the length of its motorways. At one extreme, Germany has 12,531 kilometres, Spain 12,073 km, France 10,842 km, Italy 6,554 km, the UK 3,670 km, Portugal 2,545 km, the Netherlands 2,604 km and Austria 1,678 km. 

The other extreme features mostly Central and Eastern European countries: Latvia has none, Estonia has 99 km, Lithuania 309 km, Bulgaria 394 km, Poland 583 km, the Czech Republic 633 km and Hungary 785 km. 

All the ministers who have been responsible for transport during Romania's transition from communism have pointed out the need to focus on road transport infrastructure projects. 

But in spite of this and the inclusion of road projects among national priorities, construction has stagnated, EurActiv Romania writes. Romanian President Traian Basescu served as his country's transport minister in the period 1996-2000. 

The Romanian national road network of 81,693 km has only 22,865 km of modernised roads. However, even the half of these modernised roads already need rehabilitation, according to a joint report by the Romanian Ministry of Transport and the National Statistical Institute. 

Moreover, a large proportion of the national road network is tarmac – 12,000 km, or 15% of the entire network. A further 25,000 km, or more than 30%, consists of paved roads, the report shows. 

Big ambitions 

Romanian Transport Minister Radu Berceanu said earlier this month that 160 million euros had been spent in 2008 on infrastructure feasibility studies. However, little work had been done to follow up since, he admitted. 

The Ministry of Transport has huge ambitions for highway construction. By 2013, it plans to have almost 2,000 km of motorway, and expects to build the first 400 km in 2009 followed by another 400 in 2010. 

There is European money available for infrastructure, but the authorities are doing little to absorb this. Former Transport Minister Ludovic Orban (April 2007-December 2008) had promised to absorb 100% of these funds. Nowadays, it is clear that very little of this amount has been used, the Romanian press writes. 

Romania's Transgaz to pay 123 mln lei in dividends

BUCHAREST, April 28 (Reuters) - Romanian gas pipeline operator Transgaz TGNM.BX said on Tuesday it would use more than half of last year's profit to pay dividends.

In a statement sent to the Bucharest Stock Exchage after a general shareholders meeting, Transgaz said it would pay dividends of over 123 million lei ($38 million). According to Reuters calculation, dividends stand at 10.47 lei/share.

The state monopoly posted a net profit of about 239 million lei last year, a 6.5 percent rise from a year before, but it suffered from slowing demand from manufacturers hit by the global financial crisis, especially in the fourth quarter.

Transgaz's shares have been suspended from trading because of the shareholder meeting. ($1=3.239 Lei) (Reporting by Marius Zaharia; Editing by Jon Loades-Carter)

Romania cbank '09 lending may rise by 10 pct-report

BUCHAREST, April 28 (Reuters) - Lending in Romania may rise by up to 10 percent this year, boosted by money from an IMF-led aid package, a central bank official was quoted as saying on Tuesday.
 
"There will be a relaxation of lending after IMF money (starts to) arrive in May," the central bank's chief economist Valentin Lazea told daily Business Standard. "It will be good if lending will rise by 10 percent this year."

Last month, Romania secured 20 billion euros in aid from the International Monetary Fund, the European Union and other financial institutions in a bid to meet its financing needs, strained by global financial turmoil.

Latest data show lending fell by 2.1 percent in March but was up more than 23 percent on the year, largely due to fast economic growth throughout much of 2008.

Romania government scraps plan to hike state wages

BUCHAREST, April 28 (Reuters) - Romania's centre-left cabinet on Tuesday scrapped plans to hike public wages in 2009, including for teachers and civil servants, Finance Minister Gheorghe Pogea said, to reflect an IMF-mandated budget revision.

"We cancelled plans to increase wages by 5 percent this year," Pogea told Reuters by telephone. "As a result of the crisis we did nothing else but to annul this planned increase."

The four-month-old government of Prime Minister Emil Boc has said it envisaged raising wages in line with inflation this year in its original budgetary accompanying framework.

The country of 22 million people on the EU's eastern frontier is the third member of the bloc to be bailed out after Hungary and Latvia, as world financial turmoil wipes out sources of funding for an economy heavily reliant on foreign cash.

As the global crisis engulfs Europe, Romania has turned from being the EU's fastest-growing economy to one of its most fragile as private debt in foreign currencies and a growing budget deficit have exacerbated deep external imbalances.

In a budget revision this month and endorsed by parliament on Tuesday, the government kept investment plans intact while slashing spending to meet the demands of the 20-billion-euro ($26.6 billion) IMF-led aid package it secured last month.

Spending cuts will account for roughly 1 percent of GDP while overall expenditure of just under 200 billion lei will represent 37.5 percent of the estimated nominal GDP of 531 billion lei ($169.5 billion).

However, Boc told reporters after a government meeting on Tuesday that his cabinet was still determined to increase small wages this year if economic conditions allow. (Reporting by Radu Marinas; Editing by Dan Grebler)

Tuesday, April 28, 2009

Romania cbank '09 lending may rise by 10 pct-report

BUCHAREST, April 28 (Reuters) - Lending in Romania may rise by up to 10 percent this year, boosted by money from an IMF-led aid package, a central bank official was quoted as saying on Tuesday.

'There will be a relaxation of lending after IMF money (starts to) arrive in May,' the central bank's chief economist Valentin Lazea told daily Business Standard. 'It will be good if lending will rise by 10 percent this year.'

Last month, Romania secured 20 billion euros in aid from the International Monetary Fund, the European Union and other financial institutions in a bid to meet its financing needs, strained by global financial turmoil.

Latest data show lending fell by 2.1 percent in March but was up more than 23 percent on the year, largely due to fast economic growth throughout much of 2008.

Sunday, April 26, 2009

Romania to keep its military in Kosovo, Afghanistan: president

Romanian President Traian Basescu said on Friday that his country is going to keep its troops in Kosovo and Afghanistan till the NATO mission is concluded. 

Basescu made the statement at the end of the meeting with the visiting NATO Secretary General Jaap de Hoop Scheffer, who is paying a visit to Romania in the context of the conclusion of his mandate with the alliance. 

"As for Kosovo and Afghanistan, I can say that our standpoint is that the Romanian troops will be further kept in both theaters of operations till the mission comes to an end," the president was quoted as saying by the official news agency. 

Basescu added that Romania will supplement the troops deployed in Afghanistan with 140-150 troops, after the Parliament approved this increase at the year-start. 

"In the following months, Romania will supplement its troops in Afghanistan by some 140-150 military, especially in the intelligence activity zones, medical assistance and the training of Afghani troops," he added. 

The NATO secretary general voiced respect for the Romanian soldiers who are fighting in the Alliance's theaters of operations, conveying condolences to the families of the 11 military who "paid the ultimate price during their missions." 

On the other hand, President Basescu reminded that during the mandate of Jaap de Hoop Scheffer Romania passed through two stages- of a newly entered member of the Alliance and at the end of his mandate - having the status of a solid and credible member of the Alliance. 

Source: Xinhua

Saturday, April 25, 2009

Atlantic Eye: Romania's princess at 60


MARC ELLENBOGEN

BUCHAREST, Romania, April 15 (UPI) -- The honor guard stood in full regalia as King Michael and Queen Anne strode the staircase to their waiting guests. The media in tow, the cameras flashing, Crown Princess Margarita and Prince Radu, who has just announced he is running for president of
Romania, followed close behind. I had already entered the imposing hall. Last month, Margarita turned a youthful 60.

Seventy-five selected guests were hosted for a two-and-a-half day soiree. It included royals, nobles and personalities from public life, art and academia. It was a magnificent balance of esprit de corps and jubilation. It was classical music, gala opera and disco. It was, in short, a wonderful tribute to a very worthy lady from her loving husband, family and friends.

History in 
former communist countries has not been kind to royals and nobles or their families. Restitution has been slow if at all. Jealousy abounds among former apparatchiks. False claims by royal pretenders and their allies -- which have been seen in Romania -- have complicated matters.

His Majesty King Michael is a widely admired figure. The 85-year-old monarch is the last living royal to have led a country during 
World War II. He was forced to abdicate by a puppet regime close to the Nazis. However, in his early 20s, showing great courage, the young king returned and helped to topple the Nazis toward the end of the war before being forced out again by the Communists. The king and his family lived in exile in Geneva, Switzerland, until the 1990s.

The royal family was recently restituted the lovely Pelesh Castle in 
Sinaia, some 100 kilometers from Bucharest, where the king spent much of his youth. Sinaia is strangely where the same Communists who stole his property also went on holiday. Many properties, and the role of the royal family, remain in dispute to this very day.

In the mid-1990s, 
President Emil Constantinescu helped the royals but had little political clout as an independent. President Ion Iliescu came to the king's cause late because his party was full of former apparatchiks. A well-known case of a royal pretender has complicated matters in Romania. This same group and others -- and they are truly uninformed and just plain wrong -- have spread nasty rumors trying to link King Michael and royal family with anti-Semitism. It is utter hogwash.

King Michael has visited 
Israel and the Yad Vashem Holocaust memorial. He has dedicated himself to helping Jewish families in Romania and elsewhere. As the sixth recipient of the Prague Society and Global Panel's Hanno R. Ellenbogen Citizenship Award, his majesty passed the financial portion of some $10,000 to Petrisor Ostafie, a young AIDS campaigner with human immunodeficiency virus who has fought bitter prejudice in Romania to muster support for his cause. King Michael has a long history of being down-to-earth, thoughtful, kind and benevolent -- traits he and Queen Anne have passed on to Margarita.

On a recent trip with Prince Radu, the crown princess's consort, to the Marmara Foundation in Istanbul, Turkey, I was struck by how superb a representative Radu is for his beloved Romania. The Marmara Foundation is linked to former Turkish President Suleyman Demirel. It will be hosting the 12th Eurasian Economic Summit from 
May 6 to 8. The primary focus will be energy security. Already the likes of Germany's Kurt Bodewig, Morocco's Hassan Abouyoub, the United Kingdom's Lord Pearson of Rannoch and a host of presidents and prime ministers have confirmed attendance.

During a private dinner in Istanbul, Radu and I were able to talk about Romania's future -- a conversation that continued on this occasion in Bucharest. We spoke long about how to fight corruption in the country. We spoke about the United States' relationship with 
Russia. We covered the Nabucco and Blue Stream pipeline projects. As a country that sits on the Black Sea, Romania is an indispensable partner for energy-security issues.

The Princess Margarita of Romania Foundation has raised more than $6.7 million in support of the poor and downtrodden, the young, education, community development, civic society and people with HIV in a country where having HIV is tantamount to being a leper. Princess Margarita has great passion for her country, a country she was only allowed to embrace later in life. Her university mates from Edinburgh, Scotland, were unanimous in their praise of Margarita and the royal family for their long support of Romania -- even whilst she was impoverished and in exile.

The royal family's story is one from riches to rags to some riches. In some ways, it is like a fairy tale. But the disenfranchisement was particularly hard and painful. Without friends, many of whom attended the jubilee, the royal family's exile would have been exceptionally difficult. King Michael supported his family by becoming a pilot and mechanic. Even at 85, he loves to drive his car.

As the jubilee weekend came to an end, I spoke briefly with the gritty Queen Anne.

She is very proud of her daughter's achievements and thoughtful about Romania's future.

A future in which the royal family has a rightful place.

--
(UPI International Columnist Marc S. Ellenbogen is chairman of the Berlin,
Copenhagen and Sydney-based Global Panel Foundation and president of the Prague Society. A member of the National Advisory Board of the U.S.Democratic Party, he has advised political personalities and is a founding trustee of the Democratic Expat Leadership Council.)

Strong winds draw investors to Romania, Bulgaria

By Luiza Ilie and Anna Mudeva
BUCHAREST/SOFIA, April 24 (Reuters) - Reliable winds, generous subsidies and a wide-open sector have drawn wind energy investors to Romania and Bulgaria, making them the European Union's most promising markets, analysts say.

However, not all the projects will pan out as concerns over complicated bureaucracy and limited electricity grid capacities collide with more general worries over the the global credit crunch, which is forcing many firms to curtail investment plans. Already Czech power giant CEZ is well into building Europe's largest onshore wind park in Romania, a two-stage 600 megawatt project worth 1.1 billion euros.

Projects accounting for thousands of megawatts and billions of euros have been put forward by major power players such as Portuguese EDP and Spanish Iberdrola Renovables for Romania and Japan's Mitsubishi Corp, Swiss Alpiq, U.S. firm AES Corp. for Bulgaria.

"When Bulgaria and Romania joined the EU, the interest increased in them because suddenly new countries with limited risks showed on the investors' radar screens," said Malina Stroumina, an analyst at British Emerging Energy Consulting.

"The markets in Europe have become very crowded and everybody has looked for a new frontier which is not yet full of thousands of projects."

But concerns linger over the EU's poorest members that may dampen the interest of investors who have in the past complained about insufficient transparency and tangled paperwork.

In addition, for both Romania and Bulgaria there is the problem of connecting new wind power plants to the national grids whose demand far outweighs current capacity.

"No one has really built wind plants in Romania yet, there is a lot of talk about some big ones being built, but there's not a lot of best practice that you can look to," said Charlie Hodges, analyst with New Energy Finance.

LAGGING BEHIND
Investors are drawn to the Black Sea neighbours, where they find a sympathetic ear from governments, eager for renewable power plants to bring them closer to EU goals while at the same time replacing outdated communist-era energy infrastructure.

Companies are applying for wind power projects worth 18,000 megawatts in Romania, which has a subsidy programme based on green certificates, and power grid operator Transelectrica has so far issued technical approvals for 3,000 mw.

"Romania is one of the least developed, most attractive on paper emerging markets in the whole world," Hodges said.

"It's these two things, the potential and the generous support system ... If you were to compare a pound spent in Germany maybe with a pound spent in Romania, you might get a bigger bang for your buck in Romania."

In Bulgaria, the total capacity of planned renewable energy projects, including wind, solar, hydro and biomass is about 8,000 megawatts. The Bulgarian government stimulates renewable energy projects by paying subsidies per kilowatt hour.

Bulgaria also has the advantage of a pegged currency exchange rate which insulates investors from the volatility seen in Europe's other emerging markets.

Eastern Europe, which relies mainly on coal and nuclear energy for its electricity production, is lagging behind its western neighbours in meeting EU renewable energy goals.

The bloc wants 20 percent of its energy sourced from renewables by 2020, from under 10 percent now. It also wants to reduce dependancy on Russian gas imports, particularly after recent tension over gas supplies between Russia and Ukraine.

Poland has the biggest wind energy capacity of all EU east European nations, with 472 megawatts, but observers say investors are looking further east, where returns for first comers could outweigh building costs.

Already, Bulgaria has surpassed the Czech Republic, ranking second with 158 megawatt. Romania ended 2008 with only 10 megawatt installed capacity, but the economy ministry estimates at least 150 megawatts by the end of this year. (Reporting by Luiza Ilie; Editing by Keiron Henderson)