Romania News Watch

F: Romania: staying ahead on rate cuts

2012-02-03T07:41:00.004-05:00

February 2, 2012

by Stefan Wagstyl

Romania is maintaining its record as a leader in the current bout of interest rate cuts in emerging markets. On Thursday the central bank reduced its benchmark interest rate for the third time in as many meetings, taking it down 25 basis points to a record low of 5.5 per cent. The leu barely moved, suggesting that investors have confidence in Bucharest’s approach.

The current round of reductions, which now amounts to 75 basis points, started in November, when there the September/October carnage in EMs was still fresh in the mind and it seemed that the Romanian National Bank might be taking risks with the currency. But at 4.35 to the euro, the leu is pretty much where it was when the interet rate cuts started.

The NBR took heart from the decline in inflation to 3.14 per cent in December 2011 from 7.96 percent in December 2010. It said:

This confirms the consolidation of disinflation, with the annual inflation rate reaching the target against the background of a prudent monetary policy stance, the fading-out of the first-round effect of the VAT rate hike, and of favourable trends in volatile prices, especially of food items as well as their impact on the prices of processed food products.

Looking at domestic developments, statistical indicators reveal the persistence of negative output gap despite positive dynamics in exports, industrial and farming outputs, the current account deficit staying at sustainable levels, but also a gradual recovery of credit to the private sector.

The external environment shows that uncertainties remain regarding the resolution of the Eurozone sovereign debt crisis, with impact on investors’ risk aversion, capital flow volatility, as well as on global economic developments.

Growth is slowing, like elsewhere in CEE. The European Bank for Reconstruction and Development last week cut its forecasts for the region and did not spare Romania, reducing its 2012 GDP number from 1.1 per cent to 0.8 per cent. The latest estimated growth for forecast for 2012 in south-eastern Europe is 1.0 per cent.

Moreover, Romania is coming out of the deepest recession in the region – and Romanians had been hoping for a faster recovery.

But the real fear is a sudden new crisis in the eurozone, plunging western Europe into deep recession. As the EBRD warned, a new eurozone shock could wipe 4 percentage points off CEE growth, which would plunge Romania (and many other states) back into recession.

The government is doing what it can, keeping the economy stable by signing a new precautionary IMF deal for €5bn. But its 2012 budget plan depends on 2 per cent GDP growth.

Falling interest rates may help its finances at the margin, by reducing borrowing costs. Romanian bonds have rallied this week after the government sold $1.5bn in US dollar debt. Romania sold 10-year notes at a 6.875 per cent yield, with investors bidding for almost $7 bn, the finance minister said.

If that’s a vote of confidence from international financial investors, there may be one on its way from an industrial investor too. Bloomberg reported on Thursday that Germany’s Robert Bosch, the world’s biggest car parts supplier, plans to invest about €77m ($101 m) in a new factory near Cluj-Napoca, in north western Romania. It’s close to where Nokia closed a showcase plant last year. So, a bit of good news for Cluj-Napoca to take the edge off the bad.

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Romania’s Population Declined by 2.6 Million in the Past Decade

2012-02-03T01:32:00.000-05:00

Romania’s population fell by 2.6 million people in the past decade as more Romanians left the country and fewer babies were born, theNational Statistics Institute said today.

The Balkan nation’s population declined to 19.04 million from 21.68 million in 2002, the preliminary results of a census conducted last year by the statistics institute show. About 53 percent of the country’s population lives in the urban area, while 47 percent in the rural area, the institute said.

Romania, which joined the European Union in 2007, remains the second-poorest country in the 27-state block after neighboring Bulgaria, as its economy dropped a cumulated 8.4 percent in 2009 and 2010 amid the global crisis. The economy probably grew 2.5 percent last year, according to the International Monetary Fund.

About 1.7 million Romanians live in the capital Bucharest, the census data show, while about 1 million live outside the country.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Bosch to Invest in Romanian Factory, Government Says

2012-02-02T14:22:00.000-05:00

Feb. 2 (Bloomberg) -- Robert Bosch GmbH, the world’s biggest car-parts supplier, plans to invest about 77 million euros ($101 million) in a new factory in Romania, the government said in an e-mailed statement today.

The Bucharest-based government plans to grant state aid to Bosch to help finance the investment in the factory, located near the Cluj-Napoca city, in the center of the country, according to the statement.

“The government is open to support all investments that create jobs,” Prime Minister Emil Boc said in the statement, after meeting Bosch representatives today. “I am glad Bosch has chosen Cluj to expand its operations in Romania, especially after Nokia closed down its factory in the area.”

Nokia OYJ closed its Cluj-Napoca factory last year as part of a cost cutting program and said on Jan. 25 it will sell the facilities to De Longhi Spa, an Italian home appliances manufacturer, without disclosing the terms of the transaction.

--Editors: Tim Farrand, Douglas Lytle

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

CEE MONEY-Romanian protests derail PM - and reforms

2012-02-02T14:20:00.004-05:00

By Sam Cage

BUCHAREST, Feb 2 (Reuters) - Three weeks of anti-government protests have left Romanian Prime Minister Emil Boc chances of winning November's elections hanging by a thread.

They may also ensure the European Union's second poorest country remains exactly that for some time.

Boc's harsh salary cuts and sales tax hike have grabbed the headlines, but failure to push through lower profile overhauls of inefficient and bureaucratic services and government means the economy is still falling short of potential.

The World Economic Forum ranks Romania 77th of 142 countries for competitiveness, behind not only every EU member except Greece but also lagging Rwanda, Panama and Azerbaijan.

It is 72nd in the World Bank's Doing Business rankings, just behind Kyrgyzstan, and analysts say serious reforms are unlikely before the autumn parliamentary election despite pledges to the International Monetary Fund.

"Our economy is perhaps still the weakest in the EU," opposition USL leader Victor Ponta told Reuters. "We are the most fragile in front of the new storms that might come."

Thousands of Romanians have rallied across the country in the last month to demand the resignation of Boc and his ally, President Traian Basescu, saying they have had enough of austerity and perceived corruption among politicians.

The centrist Boc, whose support in opinion polls is below 20 percent, hopes the economy quickly builds on 2011 growth of 2.5 percent and voters' attitudes soften if he avoids unpopular reforms and uses some spare cash to increase wages and pensions.

In many ways Boc has done a remarkable job.

After the economy shrank by more than 8 percent and the budget gap ballooned, austerity saved Romania from spiralling borrowing costs that would have made its debt unsustainable.

He has also pushed through some reforms, including raising the retirement age and making it easier for employers to hire and fire, but he is now under pressure from his party to make concessions in areas like raising salaries.

His policies have helped bring the cost of issuing debt down to about 7 percent for five-year paper and the leu was the region's best performing currency last year.

But that stability is misleading. The leu is barely 1 percent off an all-time low and debt yields are higher than all other emerging EU countries except Hungary.

The bottom line is that 2 percent growth will not help a country whose per capita income is less than half the EU average to narrow the gap to western Europe or even its post-communist peers.

"We need to modernise institutions which we have not modernised, we haven't made them flexible. They are too costly, they are too bureaucratic," President Basescu said in a speech.

The leftist USL alliance has stuck together in opposition longer than many analysts expected and is now well placed to take power. It has committed to an IMF deal, but there are questions over whether it will make business and investing in Romania simpler.

TIED UP IN RED TAPE

Romania's post-communist governments have shied away from reforming or selling state companies, many of which drain rather than create wealth, because that would mean heavy job losses and alienate voters.

Boc's administration promised to privatise a host of firms - including energy groups Petrom, Transelectrica and Transgaz - and his track record on austerity suggested he could be the man to push changes through.

But while selloffs are still on Boc's agenda, progress is far behind schedule and last year's attempt to sell Petrom, the jewel in an albeit tarnished crown, flopped after the government refused to budge on a price that investors deemed too high.

At the end of 2009, state companies employed about 10 percent of Romania's workforce but contributed just 6 percent of GDP. They also owed over 2.5 percent of GDP in unpaid taxes at the end of 2010, according to the Fiscal Council, a watchdog for government policy.

It is difficult to invest because most companies in which the state holds a stake are unlisted and the Bucharest stock market is very illiquid, with less than 10 percent of the value of trading in Warsaw. Foreign investment plunged from $11.4 billion in 2006 to $3.5 billion in 2010.

"Using the stock exchange in the ongoing privatisation process will not only increase efficiency and profitability, but also the transparency and the level of corporate governance," said Grzegorz Konieczny, head of the $4.4 billion Fondul Proprietatea, created to compensate victims of communism.

Setting up a business takes a month, about twice as long as in other emerging EU countries, and most people hire a lawyer to deal with the reams of documents and offices, which drives away many who may otherwise be tempted by a 16 percent flat tax rate.

In the countryside, horse-drawn cart is still a common means of transport and though land is cheap and fertile, it can be so fragmented that an investor may need to negotiate with 100 different owners to secure enough for a commercially viable farm.

It would be simple to give small companies breathing space by making it easier to set up a company, pay taxes and reclaim value added tax, said Stuart Meikle, an agricultural investment adviser who has run a farming business in Romania.

But these reforms have not been implemented.

"Too many in the current Bucharest hierarchy are too far divorced from the nitty-gritty of life here. You just may hardly notice if you can afford the minions to do the work for you," Meikle said.

($1 = 3.3190 Romanian lei) (Additional reporting by Radu Marinas; Editing by John Stonestreet)

Romania Will Lower Interest Rate for Third Time, Survey Shows

2012-02-02T06:41:00.002-05:00

By Irina Savu

Feb. 2 (Bloomberg) -- Romania’s central bank will probably reduce its benchmark interest rate by a quarter of a percentage point for a third consecutive meeting as policy makers see inflation slowing to a record.

The Banca Nationala a Romaniei will cut its main interest rate to an all-time low of 5.50 percent, according to 13 of 15 economists surveyed by Bloomberg. A decision will be announced today after 11 a.m. in Bucharest.

Romanian central bankers are among policy makers in countries including Brazil, Chile, Russia, the Philippines, Israel, Norway, Moldova, Thailand and Serbia who have eased monetary policy amid concerns that Europe’s debt crisis will quash economic growth.

“Underlying inflationary pressures remained low, administrative prices will most likely remain unchanged in the first quarter and the mood on the external markets is not very bad at the moment,” Raiffeisen Bank Romania SA economist Nicolae Covrig wrote in a report to clients. “So the context seems favorable for a new cut in the key rate and we think the central bank will not miss the opportunity.”

The country’s economy, which probably grew a faster-than- expected 2.5 percent last year, will see growth slowing this year to between 1.8 percent and 2.3 percent on falling exports to crisis-stricken western Europe, Jeffrey Franks, the International Monetary Fund’s mission chief to Romania, said on Nov. 7.

The IMF may lower its estimate for Romania this year to as low as 1 percent, Ziarul Financiar reported on Jan. 30, citing unidentified people. The economy may expand between 1 percent and 1.5 percent in 2012, slower than a previous forecast of 1.8 percent to 2.3 percent, the newspaper said.

Romania’s inflation rate will probably fall to below 2 percent in the second quarter from 3.1 percent in December and end this year at 3 percent, making room for further interest- rate reductions, Central Bank Deputy Governor Cristian Popa said at a Euromoney conference in Vienna on Jan. 17.

-- With assistance from Barbara Sladkowska in Warsaw. Editors: James M. Gomez, Alan Crosby

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

EurActiv: Liberal, socialist leaders join spat over Romania protests

2012-02-02T06:39:00.002-05:00

The European Parliament's Liberal and socialist leaders, Guy Verhofstadt and Hannes Swoboda, gave their support to the Romanian opposition during a public hearing over the democratic situation there, as protests continue in Bucharest over an unpopular healthcare reform bill.

The hearing, called ‘The Romanian Democracy - Political abuse and citizens' reactions’ was opened on 31 January with strong-worded statements by Verhofstadt and Hannes Swoboda, the newly-elected leader of the Socialists and Democrats group of the European Parliament.

The hearing took place after weeks of protests in Romania over an unpopular healthcare reform bill and focused on the state of democracy in Romania under the current government.

In Romania, the Social-Democrats and Liberals, together with the Conservatives, form a strong opposition to the current ruling party, the centre-right democrat-liberal party (see background).

“The fact that Verhofstadt showed up and supported them shows that this is something that deserves special attention, the European political groups need the support of the ruling party in Romania,” said a Romanian source in Parliament who preferred not to be named.

“I am worried that there is an increased tendency in Europe towards populism and radicalism, a re-nationalisation of Europe,” Verhofstadt said. “The message everywhere is the same: it cannot continue like that. I think there is a problem. Protests reflect that”.

Corruption

The liberal leader gave a series of examples of international groups, such as Transparency International, which reveled that the corruption situation in Romania had consistently worsened during the years of rule of the Democrat Liberal party (PDL) of President Traian Basescu.

Hannes Swoboda, who leads the Social Democrats in the European Parliament, said the latest developments in Romania were “a dangerous deviation from the principle of democracy”.

He gave an explanation for what pushed Romanians to take to the streets in the past month: "Bypassing parliament and issuing government decrees instead of democratic laws cannot be tolerated. If people realise that the parliament is not heard, they will rightly go onto the streets.”

Romanian liberals are the most loyal MEPs to the Parliament's Liberal group and the country's social-democrats are the third most loyal to the Socialists and Democrats (S&D) group, according to statistics provided by Votewatch, a democracy watchdog.

This year, Bucharest will be a point of attraction for political groups in the European Parliament, with the centre-right European People's Party (EPP) holding its annual congress there. The European Socialists will also hold their biggest political event there at the end of September.

As a relatively large country, Romania has 33 MEPs in Parliament, compared to only 18 representing Bulgaria. “In Central and Eastern Europe, Romania and Poland are generally considered the most influential countries and at the moment, the European political families have a stake in Romania,” a Romanian source told EurActiv.

Location of public hearing boosts audience impact

Opinion polls show that Romanians trust EU institutions more than their domestic political system. “Romanians think the EU is more honest than the national politicians and usually good things came from the EU in Romania, such as the reform of the judiciary, brought about with the help of the Mechanism for Cooperation and Verification,” the Romanian source said. “The EU is perceived as a guardian of good manners and directions in Romania”.

The public hearing was broadcast on Romanian television channel Antena3 which currently leads in terms of audience, has been most active in covering last month’s protests and which is broadly seen as supporting the opposition.

“For the ordinary Romanian, who does not know which are the responsibilities of the European Parliament exactly, the fact that democracy in their country was discussed in the EP will mean that the situation is getting serious – the social democrats and the liberals played on this, making the EP say it for them,” the source close to the political discussions said. He also added that the intention of the opposition parties in Romania was to affect the country’s image - for which he said president Traian Basescu holds responsibility.

Intention of hearing was 'not to complain'

“I did not come here with the opposition parties to complain or criticize Romania. I came with three targets: to inform you about facts that we consider a break of European standards of democracy,” said Victor Ponta, leader of the social democrat party in Romania.

Liberal leader Crin Antonescu likened Romania's current regime to a “dictatorship” similar to Syria, adding that the US ambassador to Romania said that “at least people are not being shot in the streets”. The liberal leader also accused Basescu of adopting a Mussolini-like rhetoric. “The Romanian government is more corrupt than ever,” Antonescu said.

Conservative leader Constantin Daniel criticised premier Emil Boc for Romania’s low capacity to absorb EU regional funding - currently the lowest in the EU, at only 3,5% - and said projects are approved very hard because they are offered in a preferential way that encourages favoritism.

Romanian MEP Traian Ungureanu, member of the centre-right European People's Party (EPP) group, criticised the President of the European Parliament, Martin Schulz, saying he exceeded his powers by getting involved in Romanian national politics and went over the top by welcoming opposition leader Victor Ponta and Crin Antonescu in the Assembly on 31 January.

“In his capacity as President of the European Parliament he has no moral right to rule in matters of domestic policy and I wonder if it's a gesture worthy of an EP President, " Unugreanu said, cited by Mediafax.

Ungureanu called S&D leader Swoboda an “accomplice” for ”reinforcing the idea that Romania is a country under dictatorship”, the news agency writes.

MEPs who are members of the ruling liberal-democrat party in Romania are expected to send an official complaint to the EP for Martin Schulz’s “behavior”, which too “massively” supports the Romanian Social Democrat Party, Romanian news agency Mediafax writes.

POSITIONS:

Sulfina Barbu, Romanian labour minister, also present at the hearing, said: “We need to be in dialogue with the opposition to be able to come up with solutions for their worries because the EU needs member states that are strong and that are bold enough to respect budgetary discipline and to curb populist discourse and movements.”

Cristian Preda, MEP, member of the EPP group in the European Parliament, about Romanian future governance: “We need an intelligent coalition not a huge force”.

Monica Macovei, Romanian MEP, member of the EPP group and former minister of Justice in Romania: “The opposition did not leave room open for debate, did not use the democratic instruments they were talking about. The protests in Romania were for the reform of the political class, she added, “and the parties present here did not mention how they are going to reform it”.

Macovei also raised questions related to “the credibility of those who came to the meeting”. Most of the civil society representatives that the social-democrats and liberals invited to the public hearing in the European Parliament were people who appear constantly on television channel Antena 3, which is widely seen as supporting the opposition.

Liberal leader Crin Antonescu accused the Romanian government of not being "modern" enough and of being "irresponsible". “There should not be a debate on whether there is dictatorship in Romania or not, in the first place, we should not have to do this”.

Social-democrat leader Victor Ponta said they were in the European Parliament “to defend the people who took to the streets in 61 cities in Romania”. He said the demonstrators were not only protesting against economic austerity, but also against the government.

NEXT STEPS:

2012: local, parliamentary elections
28-29 Sept. 2012: PES (Party of European Socialists) congress in Bucharest, Romania
Fall 2012: EPP congress in Bucharest, Romania
2014: Romanian presidential elections

Ana-Maria Tolbaru

EXTERNAL LINKS

Political Groups

Socialists & Democrats: Hannes Swoboda on democracy in Romania

Press articles

Euractiv Romania: Monica Macovei, despre dezbaterea organizata de USL la Bruxelles: Rade lumea de noi!

Romania tightens welfare rules

2012-02-02T01:36:00.001-05:00

BUCHAREST, Romania, Feb. 1 (UPI) -- New standards for public benefits in Romania, including strict limits on property ownership, are aimed at the Roma, Gypsy King Florin Cioaba said.

Cioaba said the new rules are "simply draconian," the Romanian Times reported. He said they would disqualify thousands of poor people, many of them Roma or gypsies.

"It is inadmissible that a poor person doesn't receive social benefits if one has a 9-year old motor or over 25 chickens, which help him survive," Cioaba said.

The new regulations disqualify those who own art objects or more than a couple of ounces of gold or precious stones. Benefits recipients must also be taxpayers.

The Labor Ministry said the goal of the changes is to reduce fraud. Officials point to statistics that show that almost 8 million people in a country of less than 20 million are receiving benefits, while only 5.2 million are employed.

Romanian Bonds Jump Most Since May 2010 After $1.5 Billion Sale

2012-02-01T15:40:00.002-05:00

Feb. 1 (Bloomberg) -- Romanian bonds rallied the most in 19 months after the European Union’s second-poorest member sold $1.5 billion in its first dollar debt sale.

Yields on existing euro-denominated notes maturing in 2018 fell 21 basis points, or 0.21 percentage point, to 6.26 percent as of 5:30 p.m. in Bucharest, the steepest one-day drop since May 10, 2010. The cost to insure the debt for five years with credit-default swaps slid nine basis points to 387, the lowest in almost three months and less than 395 for higher-rated euro member Slovenia, according to CMA, which is owned by CME Group Inc. and compiles prices in the privately-negotiated market.

Romania sold 10-year notes at a 6.875 percent yield, with investors bidding for almost $7 billion, Deputy Finance Minister Bogdan Dragoi said yesterday. The country in March 2011 stopped drawing funds from a 20 billion-euro ($26 billion) bailout from the International Monetary Fund and the EU as it cut spending and increased taxes. Romania does not intend to draw on a new precautionary loan provided in 2011, the IMF said in December.

“The positive investor sentiment regarding Romanian credit is due to its scarcity value -- this was the first dollar paper from Romania and hence will probably go in the benchmarks -- and positive underlying credit story supported by a strong IMF anchor,” Gyula Toth, a Vienna-based strategist for emerging markets at UniCredit SpA, wrote in a report to clients today.

Investors should buy the leu as it is set to strengthen to 4.25 per euro, the strongest level since September 2011, from 4.3477 yesterday, Toth said in the report. The Romanian currency has lost 0.5 percent against the euro this year, compared with gains of 8.5 percent for the Hungarian forint, 6.5 percent for Poland’s zloty and 1.6 percent for the Czech koruna.

The leu traded little changed at 4.3473 per euro today.

‘Outperforming’

“Following the successful Eurobond issuance, the risk reward on short euro-leu positions improved significantly, and the weak exchange rate does not seem to be in line with the outperforming credit market,” Toth said. “We originally expected about $2 billion Eurobond issuance for the whole year, so the authorities have already covered 75 percent.”

Romania’s 2018 yield has fallen 46 basis points since the end of last year as the government plans to narrow its budget deficit to 1.9 percent of gross domestic product this year from 4.35 percent in 2011. Default swaps, which fall as perceptions of creditworthiness improve, have declined 63 points this year, according to data compiled by CMA

--With assistance from Piotr Skolimowski in Warsaw. Editors: Peter Branton, Ash Kumar

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Romanian Leu May Gain After Dollar Bond Sale, UniCredit Says

2012-02-01T07:34:00.002-05:00

Feb. 1 (Bloomberg) -- Romania’s leu may strengthen against the euro after a sale of $1.5 billion of international bonds yesterday was a “big success” and showed improved investor sentiment toward the country, according to UniCredit SpA.

Investors should buy the Romanian currency as it is poised to gain to 4.25 per euro from 4.3477 yesterday, Gyula Toth, a Vienna-based strategist, wrote in a report to clients today.

The bond attracted total offers of almost $7 billion, Deputy Finance Minister Bogdan Dragoi said yesterday after the European Union’s second-poorest member sold 10-year notes at a yield of 6.875 percent. Yields on existing government notes in euros due in 2018 today fell 7 basis points, or 0.07 percentage point, to 6.40 percent by 11:15 a.m. in Bucharest, the lowest since November.

“Following the successful Eurobond issuance, the risk reward on short euro-leu positions improved significantly, and the weak exchange rate does not seem to be in line with the outperforming credit market,” Toth said. “We originally expected about $2 billion Eurobond issuance for the whole year, so the authorities have already covered 75 percent.”

The leu was little changed at 4.3454 per euro. The Romanian currency has lost 0.4 percent against the euro so far this year, compared with gains of 7.1 percent for the Hungarian forint, 6.4 percent for Poland’s zloty and 1.3 percent for the Czech koruna in the same period.

--Editors: Peter Branton, Linda Shen

To contact the reporter on this story: Krystof Chamonikolas in Prague at kchamonikola@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

Romania Boosts Natural Gas Imports on Record-High Consumption

2012-02-01T04:00:00.004-05:00

Romania boosted its natural-gas imports in the past week after consumption reached a record because of freezing temperatures, Deputy Economy Minister Claudiu Stafie said.

Gas-consumption increased 20 percent to 69 million cubic meters yesterday and will rise further to about 70 million cubic meters a day by Feb. 3, Stafie said during a televised speech in Bucharest today. That compares with consumption of about 57 million cubic meters now, according to Stafie.

“We are facing record gas consumption and we can’t extract more from our fields, that’s why we increased imports,” Stafie said. “We imported 17.5 million cubic meters of gas today and we’ll secure about 20 million cubic meters for tomorrow.”

Worsening weather and blizzards that blocked roads and cut electricity to dozens of towns since Jan. 26, boosted heating consumption. The temperature is expected to drop to about minus 27 degrees Celsius (minus 16.6 Fahrenheit) on Feb. 3 in some areas, the national meteorological administration said.

Romgaz SA, the country’s natural-gas company, said it is currently producing the maximum output from the operating fields in the country and delivers gas to E.ON AG (EON)’s and GDF Suez’s (GSZ) Romanian units, according to a statement on its website.

Gas prices fell about 5 percent today to $2.571 per million British thermal units on the New York Mercantile Exchange, after they posted the biggest weekly gain in more than one year last week.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania Sells $1.5 Billion in First 10-Year Dollar Bond Offering

2012-02-01T04:00:00.000-05:00

By Ben Martin and Irina Savu

Feb. 1 (Bloomberg) -- Romania sold $1.5 billion of bonds in its first debt offering denominated in dollars as the government seeks to finance a budget deficit and repay maturing debt.

The 10-year, 6.75 percent notes were priced to yield 6.875 percent, according to data compiled by Bloomberg. The eastern European country issued the bonds yesterday under a medium-term note program valued at 7 billion euros ($9.2 billion) that will run until 2013.

Romania is seeking to benefit from falling borrowing costs by selling the dollar bonds now, after postponing the issue in November because of the European debt crisis. The Finance Ministry said on Nov. 11 that it aims to raise between $500 million and $2 billion through the sale to bolster government finances. Yields on existing euro-denominated sovereign notes due in 2018 have fallen 25 basis points to 6.47 percent this year.

“It’s positive that the government is finally returning to the market,” Raffaella Tenconi, an economist at Bank of America Merrill Lynch in London, said yesterday before the terms of the sale were set. “We think the fundamentals continue to improve and the International Monetary Fund and EU program is on track so investors’ interest should further strengthen over the course of the year.”

The country plans to borrow as much as 2.5 billion euros of bonds on foreign markets in 2012 through two debt issues after it stopped relying on international bailout funds. The sales will help to narrow the budget deficit, which the government wants to shrink to 1.9 percent of gross domestic product this year, from 4.35 percent in 2011.

‘Interest Was Huge’

“The investors’ interest was huge, considering this is Romania’s first dollar-bond sale and it’s a clear signal of confidence in Romania’s fiscal measures,” Deputy Finance Minister Bogdan Dragoi said in a phone interview. The offering attracted bids of almost $7 billion, he said.

The government stopped drawing funds from a 20 billion-euro bailout from the Washington-based IMF and the European Union in March last year. Policy makers cut state wages and raised taxes to improve the budget outlook and the country won a new two-year precautionary loan of 5 billion euros from the IMF and the EU in 2011.

The cost of insuring against a default by Romania has declined this year by about 50 basis points, or 0.5 percentage point, to 399 basis points yesterday, 188 less than five-year credit-default swaps for neighboring Hungary, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.

Better Than Peers

The swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

“The underlying credit story in Romania has been better than in some of its central eastern Europe peer countries,” Blaise Antin, who helps manage $5 billion in emerging-market debt at TWC Group Inc. in Los Angeles, said in an e-mail. “Although the government has not provided a big new issue premium with this new bond, we still expect this bond to perform well.”

Romania sold its first bonds under the medium-term note program last June when it raised 1.5 billion euros of five-year bonds in its biggest offering of debt to international investors.

Citigroup Inc., Deutsche Bank AG and HSBC Holdings Plc are managers of the latest dollar-bond sale.

“Romania has the lowest debt per-capita in the European Union of 4,570 euros and we are not pressured to pay it right away,” President Traian Basescu said in a televised speech from Bucharest yesterday. “We will keep refinancing it, as we are doing today, but the most important thing is not to let this debt widen too much. By keeping a low debt the country can develop nicely.”

--With assistance from Tim Catts in New York. Editors: Linda Shen, Emma O’Brien

To contact the reporters on this story: Ben Martin in London at bmartin38@bloomberg.net; Irina Savu in Bucharest at isavu@bloomberg.net

To contact the editors responsible for this story: Paul Armstrong at parmstrong10@bloomberg.net; James M. Gomez at jagomez@bloomberg.net

Romania sentences ex-PM Nastase to jail for graft

2012-01-31T02:01:00.000-05:00

BUCHAREST (Reuters) - Romania's top court gave former Prime Minister Adrian Nastase a two year jail sentence for corruption on Monday, a landmark conviction in the graft-prone European Union country that has prosecuted few senior officials.

Nastase would be the first former prime minister to be sent to jail since the fall of communism in 1989. He remains free pending an appeal.

Prosecutors had said the state budget lost $2 million in 2004 when profits from an event organized by a state construction watchdog were used to finance Nastase's campaign for the presidency. Nastase lost the election to Traian Basescu, who is still Romania's president.

Nastase has denied any wrongdoing and blamed the prosecution on politics.

"In time it will be shown that this entire process had political motivations behind it," Nastase told a news conference. "It is an attempt to keep me sidelined from the public life."

The EU has repeatedly raised concerns about a failure to tackle corruption in Romania and neighboring Bulgaria, its two newest and poorest members which have been blocked from joining the passport-free Schengen zone over the issue.

Romania is perceived as the third most corrupt EU country after Greece and Bulgaria, according to corruption watchdog Transparency International.

ACQUITTED IN SEPARATE CASE

A keen hunter and fisherman, Nastase, 61, was a prime minister in a leftist government in 2000-2004 and remains a senior politician in the opposition USL alliance, which would stand a good chance of winning a parliamentary majority in an election, an opinion poll showed on Monday. A parliamentary election is expected in November.

Nastase was acquitted on a separate charge last month and has been indicted in a third corruption case. He denies wrongdoing in all the cases.

Romanians have staged nationwide demonstrations against the government and its austerity measures this month in protest against perceived corruption among politicians.

Some analysts say putting a senior politician behind bars sends an important signal that Romania is cracking down. But while prosecutors have convicted some lawmakers, sentences are suspended or they remain free pending a long appeal process.

"Frankly I didn't expect a former prime minister would ever be convicted in Romania. From the point of view of reforming the judiciary such moves are good signals, steps in the right direction," said political commentator Mircea Marian.

(Reporting by Radu Marinas; Editing by Sam Cage)

Romanian Ex-PM Gets Prison Time in Corruption Case

2012-01-31T01:57:00.000-05:00

By ALISON MUTLER

Associated Press

Romania's highest court on Monday sentenced former Prime Minister Adrian Nastase to two years in prison after convicting him of illegally raising funds for a failed presidential campaign.

The ruling is the first time a former Romanian premier has been sentenced to prison since communism ended in the country in 1989.

Four others in the case received six-year prison sentences. The sentences can be appealed.

Nastase, who was prime minister from 2000 to 2004, insists he is innocent and that the case is politically motivated. He said he would appeal.

Prosecutors alleged that companies and state agencies were forced to pay fees to attend a conference in 2004, and the money was then used to pay for Nastase's unsuccessful run for the presidency in 2004. He lost the runoff to President Traian Basescu.

"The one that won the elections wanted to take revenge on the one that lost," Nastase said Monday.

Romania is under pressure from the European Union, which it joined in 2007, to crack down on endemic corruption.

Romania will hold local and parliamentary elections later this year. Observers expect these to be the most bitterly contested polls of recent years.

Thousands of Romanians who have staged anti-government demonstrations for the past two weeks say they are sick of corruption and cronyism as well as falling living standards which they blame on the government's austerity measures.

Nastase, a key member of the opposition Social Democracy Party, was cleared in December of corruption charges in another trial where he was accused of paying a bribe to a government official in charge of preventing money laundering to destroy documents regarding a bank deposit of $400,000 (euro308,000) by Nastase's wife.

Nastase has always claimed the money deposited in his wife's account came from her aunt's sales of paintings and rare books.

Bloomberg: Romanian GDP Probably Grew 2.5% in 2011, Exceeding Forecasts

2012-01-31T01:55:00.003-05:00

Romania’s economy probably expanded at a faster pace than the International Monetary Fund’s estimates for 2011 after growing in the fourth quarter, said Jeffrey Franks, the fund’s mission chief to the country.

Gross domestic product probably grew about 2.5 percent in 2011, surpassing the Washington-based lender’s forecast of 1.5 percent, Franks said in a televised speech from Bucharest today. The fund expects output to continue to grow this year and next, Franks said, without giving estimates.

“We estimate economic growth at about 2.5 percent last year, so more than we had forecast, which is certainly good news,” Franks said during a meeting with Romanian trade unions in Bucharest. “The bad news is that we’re going to face very strong challenges which might be impeding the recovery of growth over the coming period.”

Romania, which exited a two-year recession in 2011, saw economic growth accelerating to the fastest in three years in the third quarter, sparked by a bumper harvest and a recovery in domestic consumption. The country suffered its worst contraction on record from 2009 until 2011.
Pension, Wage Increases

Prime Minister Emil Boc has been mandated by the ruling governing coalition to hold talks with the IMF and the European Union over pension and wages increases from April, Liberal Democrat Vice-President Gheorghe Flutur told reporters in Bucharest today.

A joint IMF and EU mission is currently in Bucharest to conduct a two-week review of the country’s progress under a 5 billion-euro ($6.5 billion) precautionary loan.

Export-driven growth will probably slow in 2012 to between 1.8 percent to 2.3 percent, compared with a previous forecast of 3.5 percent as Europe’s debt crisis slows growth in Romania’s major trading partners, Franks said on Nov. 7.

The IMF may lower its estimate for Romania this year to as low as 1 percent, Ziarul Financiarreported today, citing unidentified people. The economy may expand between 1 percent and 1.5 percent in 2012, slower than a previous forecast of 1.8 percent to 2.3 percent, the newspaper said.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

IMF official tells Romania it should limit public sector wage increases to help growth

2012-01-31T01:54:00.005-05:00

By Associated Press, Monday, January 30

BUCHAREST, Romania — An International Monetary Fund official says Romania’s economy will grow slightly this year.

However, Jeffrey Franks told Prime Minister Emil Boc on Monday that his government should beware increasing public sector wages as it could hurt growth.

In 2010, the government cut public workers salaries by one-fourth and raised the sales tax to 24 percent to reduce the budget deficit. That caused discontent which erupted this year in two weeks of protesters around Romania.

Romania signed up for a €20-billion ($26 billion) loan with the IMF, European Union and World Bank in 2009 to help pay salaries and pensions as economy shrank by more than 7 percent.

The country holds elections in the fall and some analysts fear the government could raise salaries too much in order to gain popularity.

Romania must recognize role in Holocaust, says president Traian Basescu

2012-01-30T04:59:00.004-05:00

BUCHAREST (AFP)---Romanian President Traian Basescu on Friday stressed the importance for his country to recognize its role in the Holocaust, on the occasion of International Holocaust Remembrance Day.

"Acknowledging the tragedy of the Holocaust which made millions of victims among Jews throughout the world and the tragic events for the Jewish community in Romania represents an essential element for the evolution and the maturity of a democratic nation", he said.

Between 280,000 and 380,000 Romanian and Ukrainian Jews died during the Holocaust in Romania and the territories under its control, according to a study by a commission of historians headed by Nobel peace prize winner Elie Wiesel.

About 25,000 Romanian Roma were also victims of deportation and persecution under marshal Ion Antonescu's pro-Nazi regime, of whom 11,000 died.

"I express my solidarity with the Jewish people and my compassion for those who were sacrificed by a regime that legitimised, in Romania too, the exclusion and the persecution of Jews and Roma", Basescu stressed.

Bucharest had long denied its participation in the Holocaust until it set up in 2003 an international commission of historians led by Elie Wiesel and tasked with bringing to light this dark period of its history

World Bank in Talks With Romania on EU1 Billion Credit Line

2012-01-30T04:59:00.001-05:00

By Andra Timu

Jan. 26 (Bloomberg) -- Romania and the World Bank are in talks over a 1 billion-euro ($1.3 billion) credit line to support the Balkan nation’s budget, the bank’s country manager Francois Rantrua said.

Prime Minister Emil Boc’s government, which is carrying out an austerity program, is negotiating with the Washington-based lender the terms of the precautionary accord, which will let it to decide at a later stage whether to draw from the funds or not, Rantrua said in an interview in Bucharest today.

The World Bank will join the International Monetary Fund and the European Union in a precautionary agreement with Romania, signed in March, once the credit line is approved. The IMF and the EU set aside 5 billion euros for the government to access on in case of market turmoil. Romania hasn’t drawn any money so far.

“Romania will have to meet certain mutually agreed measures, which are currently being discussed,” Rantrua said. “The duration of the credit line can be as long as three years.”

The bank completed disbursement in December of another 1 billion-euro loan to Romania as part of a 20 billion-euro international bailout, which was signed in 2009 and ended in May 2011.

Romania needs the World Bank’s “guidance on policies and reforming the state,” Finance Minister Gheorghe Ialomitianu said on Dec. 27.

Boc’s cabinet pledged to cut the budget deficit to 1.9 percent of gross domestic product this year from 4.4 percent of GDP in 2011.

--Editors: Elizabeth Konstantinova, Zoe Schneeweiss

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Bloomberg: Romanian Opposition Gains Support After Protests, Poll Shows

2012-01-30T04:58:00.001-05:00

Romania’s two main opposition parties gained increased public support over the current ruling party, according to a survey conducted by pollster IMAS during the most violent anti-government protests in more than a decade.

The opposition Social-Liberal Union, formed by the Social Democrats and the Liberals, would win 53.4 percent of the vote in a general election, an increase from 48 percent in a December poll, showed the IMAS poll published by the Bucharest-based newspaper Adevarul today.

The ruling Liberal Democratic Party would get 15.8 percent of the vote from 21 percent last month, the survey showed. The People’s Party, newly-founded by media owner Dan Diaconescu, would garner 13.9 percent, compared with 12 percent in the previous poll, while the Democratic Union of Hungarians in Romania, an ethnic minority party which is part of the current governing coalition, would win about 6 percent of the votes.

Romanian Prime Minister Emil Boc’s government, supported by a governing coalition, has been grappling with widespread protests for some two weeks in January ahead of general elections scheduled later this year. People took to the streets across the country to protest against an austerity budget, demanding early elections. The protests turned violent on Jan. 14 and Jan. 15, injuring 60 people.

The survey of 1,039 people was taken from Jan. 11 to Jan. 17 and had a margin of error of plus or minus 3 percentage points.

To contact the reporter on this story: Irina Savu in Bucharest at isavu@bloomberg.net.

Gabriel’s Gold Mine Triggers Protests in Romania, Bursa Reports

2012-01-30T04:57:00.000-05:00

Gabriel Resources Ltd (GBU).’s Rosia Montana gold-mine project triggered protests in Romania during the weekend, both in support of the project and opposition to it, Bursa newspaper reported today.

Hundreds of Romanians took to the streets on Saturday in the Rosia Montana village, in the center of the country, to support the Canadian company’s project, saying it will create jobs in the region, according to the Bucharest-based newspaper. Another few hundred people protested in the capital Bucharest and in Cluj-Napoca city against the project because of the use of cyanide to extract the gold.

To contact the reporter on this story: Andra Timu in Bucharest at atimu@bloomberg.net.

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romania: Boc snowed under

2012-01-30T02:16:00.000-05:00

January 27, 2012 5:41 pm
by Stefan Wagstyl
The Financial Times

Wherever it turns, the Romanian government seems to run into trouble. On Friday, it was the constitutional court rejecting plans to delay local elections by a few months and hold them on the same day as parliamentary polls due in November.

Prime minister Emil Boc hoped postponing the local elections might win a bit more time for the benefits of his tough IMF-backed austerity programme to come through, and recent public protests to lose momentum.

But the judges said no. So Boc’s only relief is the distraction generated by the snowstorms that have this week swept Romania, taking the edge off the anti-government demonstrations. But the snows will melt – the anti-government sentiment probably won’t.

These are the stormiest protests in Romania for more than a decade, inviting comparison with the violent demonstrations that repeatedly hit Bucharest after the overthrow of the communist dictator Nicolae Ceausescu.

In place of the tens of thousands that marched in the 1990s, this year’s demonstrators are generally numbered in the thousands. They do not – yet – threaten to overturn the government or force it to change tack on economic policy.

Boc’s government remains committed to its policies, including a VAT hike and swingeing public spending cuts that have brought cuts in the state payroll, pay levels and pensions.

But the demonstrations show that central and eastern Europe (CEE) isn’t immune to the anti-austerity protests that have been seen in the older members of the European Union, including Greece, Spain and Italy. Even though Romanians went through an even more serious economic crisis after 1989, the current slow down is bad enough to make them angry.

Catalina Molnar, a Bucharest-based economist with RBS, told beyondbrics that educated people accepted that the government had little alternative but to stick to its programme but other people did not.

Like other people in Europe we have to face the crisis as well as possible. Romanian people can see that everybody else is in a mess too.

Investors have taken note. The Romanian leu is up this year by less than 1 per cent aginast the euro, compared with much bigger gains in other emerging market currencies, including, in CEE, the Polish zloty (+7 per cent) and the Hungarian forint (+7 per cent).

Boc’s difficulties were triggered by the 2008-9 crisis which plunged Romania deep into recession and forced it to promise fiscal reforms in return for a €20bn rescue loan from the IMF/EU.

This month’s demonstrations were triggered by a public row between Raed Arafat, a popular health official, and president Trajan Basescu, Boc’s close ally, over plans to privatise a medical emergency service.

Arafat quit after he was publicly criticised by Basescu, but reinstated a few days later in response to public protests. However, with the wind in their sails the demonstrators widened their campaign, and won increasing support from the opposition USL, the leftist alliance.

Boc’s efforts at conciliation were stymied this week by comments from foreign minister Teodor Baconschi, who called the protesters “inept and violent slum-dwellers”.

Baconschi was sacked on Monday and replaced by Cristian Diaconescu, an experienced ex-minister. But the episode did nothing to dispel the impression that the government is struggling to stay in control.

A lot will now depend on the economy. The European Bank for Reconstruction and Development this week cut its forecasts for the region and did not spare Romania, reducing its 2012 GDP number from 1.8 per cent to 1.5 per cent.

That’s in line with its 1.7 per cent forecast for south east Europe. But Romania is coming out of the deepest recession in the region – and Romanians had been hoping for a faster recovery.

The EBRD said:

Until recently, Romania’s economy was on track to record robust growth in 2012, after a modest recovery in 2011. However, the slowdown in the eurozone is already having a significant dampening effect on Romania’s exports, and further weakening is likely in the coming months. The Greek crisis has a dampening effect mainly through crossborder banking relationships. Continued IMF support provides an important buffer.

Worse, as the EBRD warned, a new eurozone shock could wipe 4 percentage points off CEE growth, which would plunge Romania (and many other states) back into recession.

The government is doing what it can, keeping the economy stable by signing a new precautionary IMF deal for €5bn. But its 2012 budget plan depends on 2 per cent GDP growth.

The central bank is helping to stimulate growth. Having cut interest rates by a total of 50 basis points at the last two monetary policy meetings (in November and January), the National Bank of Romania could cut the key rate by another 25 basis points at its next meeting on February 2.

But there are limits to what can be done in Bucharest. A fragile economy on the edge of the European Union faces some very cold winds blowing from the west. They could do far more damage than this week’s snowstorms.

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Romania's winter of discontent

2012-01-30T02:14:00.001-05:00

The Economist
Jan 28th 2012

THEY have been called "worms", "violent and inept slum-dwellers", and "suckers". And yet hundreds of them, exasperated about austerity measures, political incompetence and lack of public consultation over laws, keep coming out on to the freezing winter streets of Bucharest and other Romanian cities to urge the president and government to resign.

"Now is the winter of our discontent—Suckerspeare" read one banner in Bucharest's University Square—the same spot where anti-Communist protesters were beaten and killed in the early 1990s in clashes with government-controlled miners. Now the demands are more diverse: no to shale-gas exploration and gold-mining with cyanide, yes to the return of the long-defunct monarchy, higher pensions, lower taxes, more bicycle paths.

Others are simply asking for politicians to respect them. And after two weeks of protests, it seems that the politicians have started to listen. Or at least to find some scapegoats.

On Monday Teodor Baconschi, the foreign minister, was sacked after writing about the "violent and inept slums" that were home to the protestors, to be compared with the rest of "hard-working Romania." Then Iulian Urban, a deputy from the ruling Democratic Liberal Party (PDL), resigned after calling the protesters "worms".

On Wednesday President Traian Băsescu finally broke his silence with a televised speech in which he admitted there was a "rupture" between him and part of the population. He said that austerity was needed to restore Romania's economic health, and complained that it was "unfair" to be labelled as a "dictator", as some protestors have done.

Yet Mr Băsescu conceded that he needs to "reduce the blunders I sometimes make in public", such as the one that sparked the protests—his row with a respected doctor who opposed the government's plan to partially privatise the health-care system.

The opposition, meanwhile, is trying to capitalise on the anger movement, by organising parallel demonstrations. General elections are due in November, and the Social-Liberal Union is riding high in the polls with about 60% support, while the PDL languishes at around 11%.

This week Romania's constitutional court gave the opposition another boost by ruling against a government plan to hold local elections at the same time as parliamentary ones. The unpopular PDL had wanted to merge the two so as to postpone the local campaign by a few months.

But the advent of a centre-left government later this year is unlikely to save Romanians from more austerity. The country has contracted another $5 billion loan from the IMF, on top of a $27 billion rescue package agreed in 2009 with the IMF and the EU. And with growth forecasts being slashed all around the region as the euro-zone crisis bites, Romania's winter of discontent has few chances of turning into a glorious summer.

Romanians protest against gold mine plan

2012-01-30T02:08:00.003-05:00

(Reuters) - Hundreds of Romanians protested on Saturday against a plan to set up Europe's biggest open-cast gold mine in a small Carpathian town, joining a wave of anti-government rallies.

For the past two weeks, thousands of citizens have gathered in cities across Romania to demand the resignation of President Traian Basescu and his close ally, Prime Minister Emil Boc, as anger over austerity measures and falling living conditions have spread.

The protesters have also criticised Basescu and the centrist coalition government for backing the gold mine project in the western town of Rosia Montana. However, most town residents support it, and also held a rally on Saturday.

The project, which aims to use cyanide to mine 314 tonnes of gold and 1,500 tonnes of silver, has drawn fierce opposition from civic rights groups and environmentalists, who say it would destroy ancient Roman gold mines and villages.

It is led by Rosia Montana Gold Corporation, majority-owned by Canada's Gabriel Resources Ltd with the Romanian government holding 19 percent.

Waving Romanian flags and banners saying "United for Rosia Montana," about 300 protesters gathered outside parliament in Bucharest. They called on the government to deny Gold Corporation an environmental permit it needs to open the mine.

"Never mind that this project is an utter environmental catastrophe waiting to happen, but it is also the worst possible business from a financial point of view for the Romanian state," said Vlad Rogati, a 61-year-old retired engineer at the rally. "We are being misled. The promised jobs for miners are an illusion."

Most of the 2,800 residents of Rosia Montana hope the project will bring jobs and money to their impoverished town, which took a hit when a state-owned gold mine closed in 2006. Only a small group of residents refuse to sell their property to make way for the mine.

Television footage showed hundreds of people at the rally. "We are standing on gold but dying of hunger," said one banner.

Gold Corporation has valued the mine at $7.5 billion, of which it said Romania would get about $4 billion in direct taxes, dividends, service providers and jobs.

The Environment Ministry said on Saturday it was still evaluating Gold Corporation's permit request, and that it would propose that the government grant it "only if there is certainty the investor will respect the best mining practices so that it will not harm the environment," according to local news agency Mediafax.

The company proposes four gold quarries over the mine's lifespan, which would destroy four mountaintops and wipe out three villages of the 16 that make up Rosia Montana, while preserving the historical centre.

Romanians, Bulgarians Still Face Some EU Work Restrictions

2012-01-30T02:06:00.003-05:00

SETimes

January 28, 2012
By Paul Ciocoiu

A Belgian official is accusing Romanians and Bulgarians working in his country of undercutting local workers, according to reports.

John Crombez, Belgian state Secretary for Repression of Fiscal and Social Fraud, said some Bulgarians and Romanians are working for less money than normal pay rates, according to reports in De Standaard and Het Nieuwsblad on January 18th.

Belgium and eight other EU member states — Germany, Ireland, France, Luxembourg, Holland, Austria, the UK and Malta — agreed in December with the European Commission (EC) to prolong work restrictions for Romania and Bulgaria until January 2014.

Italy and the Czech Republic lifted all restrictions, while Spain initially kept its market open for the two countries’ workers, but decided last summer to restrict their access.

“The Commission has clearly asked the countries that want to keep the restrictions to also present the grounds, include in their notifications concrete data and pertinent arguments,” Michael Jennings, the EC spokesperson said.

The nine countries cited high unemployment rate to justify continued restrictions for Romanians and Bulgarians.

By 2014, all EU member states must lift restrictions for the citizens of the two countries that joined the EU in 2007. A total of 16 EU member states have liberalised their work market for Romanians and Bulgarians to date.

The Romanian authorities say they regret the nine states’ decision, but the measure does not have an economic impact.

“Maintaining these restrictions cannot negatively affect the Romanian economy unless we look at it as lost opportunities, namely what Romanians could have won if they had free access to those markets,” blogger Cristian Orgonas, who runs a popular economics blog, Businessday.ro, told SETimes.

An estimated three million Romanians work abroad, mostly in Italy and Spain. In 2010, they sent about 3.8 billion euros in remittances to Romania and 4.3 billion the year before, while 2008 saw a record 6.6 billion euros in remittances.

Alin Mihalache, a carpenter, has worked in several EU countries.

“The nine countries’ decision to keep their markets closed to us comes in a time of crisis which would have made our search for a job difficult enough anyway, so I don’t really see any loss here,” he told SETimes.

In Italy, the liberalisation of the market is expected to pay off. The leaders of the Romanian community in Italy saluted the government’s decision to fully open the internal work market for Romanians, pointing out the benefits of such a measure.

“The decision is good news for qualified Romanians who, until now, were restricted from accessing jobs matching their professional training, such as accountants, teachers and agronomists. We hope that as, many as possible, Romanians will have access to these jobs,” Marian Mocanu, the president of the League of Romanians in Italy, told SETimes.

SETimes

The Southeast European Times Web site is a central source of news and information about Southeastern Europe in ten languages: Albanian, Bosnian, Bulgarian, Croatian, English, Greek, Macedonian, Romanian, Serbian and Turkish. The Southeast European Times is sponsored by the US European Command, the joint military command responsible for US operations in 52 countries. EUCOM is committed to promoting stability, co-operation and prosperity in the region.

Romanian Court Rules Against Same Day General and Local Election

2012-01-30T02:04:00.002-05:00

By Andra Timu

Jan. 25 (Bloomberg) -- Romania’s Constitutional Court rejected a law that merged holding local and parliamentary elections on the same day after it was challenged by the opposition.

The nine-judge court panel ruled against the law on grounds it is unconstitutional, Acsinte Gaspar, a judge, said in a phone interview in Bucharest today. The opposition Social Democratic Party and the Liberal Party challenged the law in court after Prime Minister Emil Boc survived a no-confidence vote in Parliament on Dec. 22, which was tied to the new election law. Winning the vote helped Boc push it through the assembly.

“The government will respect the court’s ruling,” Boc said today, according to Mediafax news service, adding that he will say more after the court publishes its motivation for the decision.

Boc’s government sought to hold the elections at the same time this year to cut spending as part of its pledges to narrow the country’s budget gap to 1.9 percent of gross domestic product from an estimated 4.4 percent in 2011. Merging the elections next year would save the state some 20 million euros ($26 million), according to the government’s estimates.

Victor Ponta, the head of the social-democrats, demanded Boc’s resignation at a press conference in Bucharest today on grounds he won a confidence vote on “a law that is unconstitutional,” he said.

Boc has embarked on an austerity program this year to reassure investors that his government will maintain fiscal discipline before the elections, after signing a new two-year 5 billion-euro precautionary agreement with its international lenders this year. No election date has been set yet.

--Editors: Elizabeth Konstantinova, Douglas Lytle

To contact the reporter on this story: Andra Timu in in Bucharest at atimu@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

Romanian president defends his government, despite the protests against it

2012-01-30T02:03:00.004-05:00

By Associated Press, Published: January 25

BUCHAREST, Romania — After nearly two weeks of anti-government protests, Romania’s leader acknowledged on Wednesday that some citizens have lost faith in his leadership but insisted that the austerity measures he has introduced have pulled the country out of a recession.

But as President Traian Basescu gave his nationally televised speech hundreds of people gathered in Bucharest for another demonstration, despite a heavy snowfall.

“I know what needs to be done,” Basescu said in a 35-minute speech at the presidential palace. He said his government must “continue the fight against corruption and tax evasion,” and create more jobs.

Basescu said that after 13 straight days of protests around the country it is clear that many citizens are unhappy with his government, but he insisted it has a good record and has passed laws to reform the nation’s criminal, justice and education systems.

“We are where we should be. Romania has come out of a recession,” and we will have economic growth this year, the president said. The International Monetary Fund says the economically struggling country is expected to have about 2 percent growth this year.

Basescu denied allegations that he is meddling in state institutions. “I am not a dictator,” he said.

Many Romanians have become disenchanted with their once-popular president, saying he is too outspoken and has grown increasingly confrontational. Basescu compared running Romania to his previous career as a ship captain and said he would not abandon the country “in the middle of a crisis.”

Romania signed up for a €20-billion ($26 billion) loan with the IMF, European Union and World Bank in 2009 to help pay salaries and pensions, when the economy shrunk by more than 7 percent. In 2010, the government increased the sales tax from 19 to 24 percent and cut public workers salaries by one-fourth to reduce the budget deficit. Romanians also are angry over cronyism and a perception that the government is not interested in the problems of ordinary people in this nation of 22 million.

The demonstrations — some containing thousands of people — are being held against very low living standards, widespread corruption, and the passage of some laws without a parliamentary debate.

Earlier Wednesday, Romania’s Constitutional Court ruled that a new law allowing simultaneous local and parliamentary elections is unconstitutional. Such local and parliamentary elections have previously been held several months apart in the same year.

The court, which did not provide details on its ruling, rejected the law following a complaint from opposition parties. The government passed the law through Parliament in December, without debate.

The opposition says the law would complicate the election process, creating more confusion and making cheating easier. The government said organizing one ballot for two different elections would save money.

Following heavy criticism, lawmaker Iulian Urban resigned from the governing Democratic Liberal Party — led by Prime Minister Emil Boc — after calling the protesters “worms.”

On Wednesday, the U.S. Ambassador to Romania Mark H. Gitenstein criticized what he called high-level corruption in Romania.

“Profits from publicly owned enterprises are too often diverted back to state coffers or into the pockets of well-connected individuals,” he said in a speech alleging that public funds are sometimes illegally siphoned off.