Monday, August 24, 2009
(Angus Reid Global Monitor) - Incumbent Traian Basescu is holding on to the top spot in Romania’s presidential race, according to a poll by CURS. 33 per cent of respondents would support the Democratic Liberal Party (PD-L) candidate in this year’s ballot, down three points since June.Mircea Geoana of the Social Democratic Party (PSD) is second with 27 per cent, followed by Crin Antonescu of the National Liberal Party (PNL) with 13 per cent, Bucharest mayor Sorin Oprescu with eight per cent, Corneliu Vadim Tudor of the Party of Great Romania (PRM) also with eight per cent, Kelemen Hunor of the Hungarian Democratic Alliance of Romania (UDMR) with three per cent, and Prince Radu Duda with two per cent.
In prospective run-off scenarios, Basescu is virtually tied with Geoana. Both candidates hold the upper hand in head-to-head contests against Antonescu.
Basescu won the presidential run-off in December 2004 as the candidate of the Alliance for Justice and Truth (DA)—comprising the Democratic Party (PD) and the PNL—with 51.23 per cent of the vote.Romania held a legislative election in November 2008.
Final results gave the coalition of the PSD and the Conservative Party (PC) 33.09 per cent of the vote and 114 seats in the lower house, followed by the PD-L with 32.36 per cent and 115 mandates. Basescu nominated PD-L leader Emil Boc to take over as prime minister from Calin Popescu Tariceanu.
Last month, Oprescu said he was pondering whether to join the presidential race as an independent, saying, "I am not ruling it out, but it doesn’t mean I’ve made a decision. I need more time, for it’s a very important decision. I need people’s sympathy and faith. This is not a time for play, it is a very serious matter."Romania must hold a presidential election by the end of November 2009. If no candidate garners more than 50 per cent of the vote in the first round, a run-off between the top two vote-getters must take place within 14 days.
If a presidential election were held next Sunday, who would you vote for?
Epoch Times Staff
BUCHAREST—Romania has the highest inflation rate—at 5 percent—among all European Union (EU) member countries, according to the European statistics institute, Eurostat. That figure is staggering considering the inflation rate was 0.2 percent in July as a whole in the EU.
“Romania is like a sick man, who sometimes gets a cold, as opposed to other countries, that are healthy economic organisms,” the Romanian Minister of Economy Adriean Videanu was reported as saying to Romanian press.
Hungary follows closely with 4.9 percent and Poland with 4.5 percent. On the other side, Ireland is reporting a 2.6 percent deflation, while Belgium and Luxembourg both reported a 1.7 percent deflation.
Compared to the previous month, annualized inflation dropped in 20 countries, stagnated in one and increased in five. According to the Romanian National Statistics Institute, Romania's annual inflation rate actually decreased by almost a percentage point in July from a 5.86 percent reading in June.Signs of Recovery in EUEastern and Central European nations are showing signs of economic recovery. However, some still have difficulties reaching normalcy. Some analysts predicted that economic recovery for the Baltic States will be gradual.
“The recent economic downturn is mainly due to the decrease of exports on the European markets. The European Union's recovery is a good condition for the recovery of the Romanian economy as well,” the Romanian Minister of Economy Adriean Videanu told reporters.
Poland and Slovakia’s economies showed the best signs of improvement during the second quarter, analyst Aurelian Dochia told AFP. He added that Baltic countries will take longer to recover while countries like Romania, Bulgaria or Hungary are somewhere in the middle in terms of their speed of recovery.
Romania's economy during the second quarter shrank 1.2 percent, compared to the first three months of the year. Recently, representatives of the IMF came to Bucharest to evaluate the economic situation of Romania.
“The IMF's forecast for 2010 is a positive 0.5 [percent]. I'm a bit more optimistic, but it is important that both we and the Fund foresee an economic re-launch in 2010," Adriean Videanu told the press.
However, Bucharest authorities still faces huge budgetary constraints. The government is compelled to send all state employees, including MP's and the Prime Minister, on a compulsory 10-day holiday to lower the federal payroll expense.
Friday, August 14, 2009
Epoch Times Staff
With Romania in economic trouble, the International Monetary Fund (IMF) is evaluating whether the country has met requirements for a multi-billion dollar bailout package.
IMF delegation chief to Bucharest Jeffrey Franks said this week that Romania's GDP will drop 8 to 8.5 percent this year.
"A very severe recession hit Romania," he told reporters in Bucharest.
In March, Romania and the IMF agreed to a 19.95 billion euro ($28.3 billion) bailout package, to be delivered over a period of two years. The IMF's mission in Bucharest was to evaluate whether Romania is meeting certain requirements to eventually pay back the loans.
Furthermore, the Romanian government negotiated with the IMF over how to spend the money. It was initially agreed that the money would be used to fund foreign currency reserves of the Romanian Central Bank. But the Romanian government requested to use the funds to cover part of the budget deficit.
Franks said that while the "Romanian banking system managed to put up with the negative economic situations," he warned that the system will continue to be under stress.
Inflation is expected to reach 4.3 percent by the end of the year, with a current account deficit of 5.5 percent for this year. The decrease is a result of the international economic downturn and fall in demand for goods and services. For the next two quarters of 2009 the downturn is expected to slow down, with modest economic growth for 2010.
With manufacturing showing signs of tentative improvement in eastern and western Europe, countries heavily reliant on domestic demand are still in doldrums because of rising unemployment, public spending cuts and a shortage of credit.
"A double-digit drop in GDP for 2009 cannot be ruled out," said Lars Christensen from Danske Bank in Copenhagen. "There is no sign of stabilisation in the second quarter, contrary to what we for example have seen in the euro zone."
The economy shrank 1.2 percent quarter-on-quarter in the 2nd quarter, compared to a 4.6 percent contraction in the first.
Earlier this year Romania became one of several European Union members from the east to seek financial aid from the International Monetary Fund and other institutions including the European Commission to prevent a financing crisis.
Underscoring the depth of the country's woes, the Fund agreed this week for Romania to run a gaping budget deficit of 7.3 percent gross domestic product to account for the "severe" recession that has eaten into tax revenues.
The IMF now expects the Romanian economy to contract by at least 8 percent this year, compared with earlier predictions of 4 percent and last year's growth of 7.1 percent.
The data cemented expectations of further monetary easing in Romania as the central bank strives to revive the economy. It has cut rates by 1.75 percentage points so far in the current easing cycle, but the easing was limited by concerns over a weak leu hurting the inflation outlook.
"It's worse than I expected, Romania is going through a severe hard landing after a boom lasting for five years," said Miroslav Plojhar from JPMorgan in London.
"I still expect a 50 basis points cut at the next meeting, and probably no change in November, because there is the risk of a resurgence in risk aversion in the last quarter."
On a quarterly basis, the economy contracted by 1.2 percent in April-May, compared with 4.6 percent in the first quarter, official statistical estimates showed.
The statistical office will issue a detailed breakdown on the data on Sept. 1.
BUCHAREST, ROMANIA — The Romanian government says it plans to cut 14,000 jobs as it struggles with a deep recession and a shrinking economy.
The decision announced Wednesday will affect almost all the country's ministries, which have been heavily criticized for their high salaries and allegations of misspending.
Lawmakers must approve the government's plan, but the governing coalition has a large majority in Parliament.
The International Monetary Fund predicts the Romanian economy will shrink by 8 to 8.5 percent. It has said it will lend Romania $17.1 billion to cushion the effects of the sharp drop in capital inflows caused by the global financial crisis.
It said Monday the country would be allowed a larger budget deficit to cope with the deeper-than-expected downturn in the economy. It is now allowed 7.3 percent of gross domestic product, instead of the initially agreed 4.6 percent deficit.
Wednesday, August 12, 2009
By Adam Brown Aug. 12 (Bloomberg) -- Romania’s current-account deficit narrowed in the first half as a weaker leu and declining domestic purchasing power discouraged imports.
The gap narrowed to 2.38 billion euros ($3.36 billion) from 8.88 billion euros a year earlier, the Bucharest-based Banca Nationala a Romaniei said in an e-mail today. The government agreed in April to take a 20 billion-euro loan led by the International Monetary Fund to cover its current-account and budget shortfalls, joining other eastern European nations including Hungary, Ukraine, Belarus, Latvia and Serbia in seeking international aid.
The IMF predicted yesterday that the deficit of Romania’s current account, the widest measure of funds flowing in and out of the country, will narrow to 5.5 percent of gross domestic product this year from 12.5 percent last year. The leu has weakened about 15 percent against the euro in the past year, narrowing the trade gap. Imports dropped an annual 37 percent in the first half, while exports declined 20 percent, the National Statistics Institute said yesterday.
Lending growth, which boosted spending in the past three years, slowed to an annual 11.2 percent in June from 64 percent a year ago. Wage increases slowed to 8.3 percent from more than 20 percent at the same time, discouraging Romanians from buying imports. To contact the reporter on this story: Adam Brown in Bucharest at email@example.com;
Romania's 2010 gross domestic product is likely to decrease 2 percent, an improvement from 2.5 percent in the previous forecast, the Romanian HotNews.ro Web site said Wednesday quoting the Merrill Lynch analysis. In the first three months this year, Romania's GDP dropped 6.2 percent when compared with the same period in 2008.
The 2009 second quarter GDP declined 8 percent when compared with the second quarter in 2008, Romanian Finance Minister Gheorghe Pogea said. The second quarter GDP deterioration apparently forced world analysts to revise their predictions for Romania's recession. On Monday, the International Monetary Fund revised its forecast of Romania's 2009 GDP drop to between 8 percent and 8.5 percent from its March prognosis of a 4.1 percent drop.
"We have come to an agreement on what has happenend and what needs to happen," the head of the International Monetary Fund's mission to Romania, Jeffrey Franks, told a news conference at the end of a 10-day evaluation trip.
The agreement now has to be put to the IMF's executive board for a final decision, Franks said.
"Once our board has made its final decision, then additional resources will immediately become available."
The IMF is putting up 12.95 billion euros (18.38 billion dollars) out of a 20-billion-euro bailout package in conjunction with the World Bank and the European Union that was finalised in May.
Romania has already received 5.0 billion euros of the IMF money and the latest talks concerned a second instalment of 1.9 billion euros.
Romania entered recession in the first three months of this year when gross domestic product (GDP) shrank by 4.6 percent on a quarterly basis.
An even sharper contraction is expected in the second quarter and the Romanian economy is projected to contract by 8.0-8.5 percent in 2009 as a whole, Franks said.
Nevertheless, Romania could return to "modest growth" in 2010, he added.
Franks also said the IMF acknowledged that Bucharest's budget deficit would widen to 7.3 percent of GDP instead of 4.6 percent as originally expected with the government facing increasing difficulty in paying public sector wages and pensions.
"We have agreed that a portion of our disbursement could be used for budgetary financing," Franks said.
But he insisted Bucharest would have to take measures to cut spending in the medium and longer term.
In a joint statement issued in Brussels, the IMF and the EU said that the European parent banks of the nine largest foreign-owned banks in Romania had all committed to maintaining a solid presence in the crisis-hit country.
The banks concerned -- including Eurobank, National Bank of Greece, Societe Generale, Volksbank and UniCredit Group -- represent 70 percent of Romania's banking market and are therefore key to the EU nation's financial recovery.
The foreign-owned banks had signed commitments to maintain a relatively strong capital to risk ratio to help firm up the country's financial system, the statement said.
"The success of Romania's macroeconomic reform program and the sustainability of its balance of payments depend significantly on the continued active involvement of foreign banks in Romania," the IMF and EU said.
Earlier this year there was a high level of concern among some ratings agencies and other observers that there could be a new twist to the global economic crisis coming from misfiring banks in Eastern and Central Europe.
Romania's credit ratings were particularly under threat amid fears that foreign banks would give up on their investments in financial institutions in the region. Agreements like this have helped to ease those fears.
Under the agreement announced on Monday the parent banks will boost the capital of their subsidiaries "to maintain a 10 percent capital adequacy ratio," the EU and IMF said in their statement.
But the gap is now narrowing sharply as the world economic crisis hits consumption and manufacturing, raising concerns that it may be adjusting too fast. Preliminary GDP data for the second quarter is due out on Thursday, but Finance Minister Gheorghe Pogea has said the economy had likely contracted by more than 8 percent on the year, compared with a 6.2 percent contraction in January-March. The International Monetary Fund now sees the external shortfall at 5.5 percent of gross domestic product this year, compared to a previous 7.5 percent estimate.
Monday, August 3, 2009
BUCHAREST, Aug 3 (Reuters) - Romania's No. 2 bank, BRD BRDX.BX, posted a 17.4 percent fall in its first-half net profit on Monday, reflecting surging loan-loss provisions and slower lending activity. BRD, controlled by France's Societe Generale (SOGN.PA), reported a net profit of 425 million lei ($143 million) in the first half of this year, slightly above a forecast of 390 million lei in a Reuters poll.
Risk costs or loan-loss provisions stood at 408 million lei in the first six months, rising 171 percent on the year.
"The first half of 2009 saw a significant slowdown in lending demand and heightened risk growth," the bank's chief executive, Patrick Gelin, said in a statement.
Eastern European banks have been hit by a slowdown in lending and rising provisions for non-performing loans, as currencies' weakness and growing unemployment have hit clients.
While financing conditions have deteriorated because of the global credit squeeze, banks have raised rates on deposits to attract more funds, compromising a good chunk of their earnings.
BRD shares closed at 10.1 lei on Friday, down almost 3 percent from Thursday's close, after briefly touching their highest level since October during the session. ($1=2.982 Lei) (Reporting by Marius Zaharia; Editing by Simon Jessop)
Like most of its neighbours, Romania slipped into recession this year as the world crisis slashed lending and consumption and forced it to secure 20 billion euros ($28.23 billion) in IMF-led aid.
The finance ministry said in a statement consolidated revenues reached 77.3 billion lei ($25.92 billion), with income tax collection rising by 8.2 percent while profit tax revenue fell 8 percent year-on-year.
It said spending grew 5.6 percent on the year to 91.7 billion lei.
Romania will ask the International Monetary Fund to allow it a higher budget deficit of up to 7 percent of GDP this year, hoping to follow Hungary in securing easier terms for an aid package.
The Washington-based lender has begun a first review of Romania's progress in meeting aid conditions, which include a fiscal deficit target of 4.6 percent of GDP in 2009.