September 2004
Standard & Poor's credit analyst Moritz Kraemer says the decision also reflects a significant improve in the management of public finances on the background of increased public demand that reflected in a rise in Government's tax revenues and a decrease in expenditure with interest on public debt.
The positive trends in the structural reforms process were acknowledged by the International Monetary Fund, which this July concluded a precautionary stand-by arrangement with Romania. Moreover, the privatisation of some state companies, namely of Petrom oil corporation and two electricity distribution companies have been successfully carried out. The successful completion of these privatisations is expected to generate a double positive effect, in that it will substantially increase Government's privatisation revenues as well as Romania's chances of being acknowledged a functioning market economy, which is a pre-condition for Romania's accession to the European Union.
According to Standard & Poor's , a sustained commitment to fiscal consolidation and microeconomic reform by the government that emerges from the November 2004 elections could lead to an upgrade of the foreign currency ratings to investment grade in the medium term.
"The Romanian Government believes Standard & Poor's was justified to upgrade its ratings on Romania, as this recognizes the substantial achievements in the implementation of economic reform, the same as its was done in the agreement with international financial institutions and the European Union," says Romanian Finance Minister Mihai Tanasescu. "This will favour Romania's presence in international capital markets and is an important element in Romania's attracting foreign financial resources," says Tanasescu.
(source: ACT Media)
Managers’ average annual earnings: 30,000 euros
The average annual salaries of managers in Romania amount to 30,000 euros, ranking quite low in a survey worked out by the Mercer Human Resource Consulting, which looks at the earnings of executive managers in Western and Eastern European companies. Managers in Eastern Europe earn an annual 35,000 euros, less than half of the 82,000 euros reported for their counterparts in Western Europe. The highest salaries are paid in Switzerland, where management team members make an average 138,000 euros, while managers in Austria and Denmark receive approximately 95,000 euros.
At the other extreme are Romanian managers, with an average 30,000 euros per year, and their Bulgarian counterparts with an average 24,000 euros per year. "Generally speaking, managers in Eastern Europe earn less than those in Western Europe, moreover, they pay higher taxes. Yet Eastern economies usually report higher growth rates, therefore revenues could go up twice as fast as in Western countries," says Carlos Mestre, partner with Mercer. As for the cost of living for European managers, the survey indicates managers in Western countries can buy in average 50 percent more products and services on their net salaries than those in the East. Swiss managers can thus buy four times more on the money they make than managers in Bulgaria. According to the survey, management positions in the USA, Japan and Hong Kong are better paid than in Europe, with annual average salaries of 103,000, 94,000 and 93,000 euros respectively.
(source: ACT Media)
Dacia-Renault releases first Logan cars
Customers may purchase Dacia's latest version Logan beginning with September 9.
Automobile Dacia-Renault (Dacia-Renault carmaker) will release, September 9-13, an Open-house event, scheduled in all branches across the country. Throughout the event, potential customers may test all Logan models and the 5 luckiest people who find the keys inside leaflets may win Logan Ambiance, the prize of the contest ''You've got the key, drive off." Also starting September 9, Dacia Extenso insurance will be released for Solenza and Logan models. The 3-year or 100,000 km-insurance for Logan will cost 175 euros and 155 euros for Solenza. Low-income customers will be extended two financial products, Moderato and Modelease, respectively RCI Financing and RCI Leasing. Moderato is a loan in euros or lei, designed for individuals who may benefit from a 7-year financing with a down payment of 15 percent only. Modelease is the leasing offer in euros designed for both individuals and companies. Customers opting for a minimum 3-year Modelease financing will have free access to the Dacia Extenso insurance.
(source: ACT Media)
IMF Completes First Review of Romania's 24-Month Stand-By Arrangement
The Executive Board of the International Monetary Fund (IMF) has completed the first review of Romania's economic performance under a 24-month Stand-By Arrangement (SBA). In doing so, the Board approved a request for a waiver for the non-observance of the end-June quantitative performance criterion on the ceiling on arrears of private enterprises to the state budget and the four social security funds. The Romanian authorities have not made a purchase so far and intend to continue treating the arrangement as precautionary.
The IMF's Executive Board approved the Stand By-Arrangement on July 7, 2004 (see Press Release No. 04/137) for an amount equivalent to SDR 250 million (about US$367 million).
Following the discussion of the Executive Board, Mr. Agustín Carstens, Deputy Managing Director and Acting Chair, said:
"Underpinned by the continuing favorable performance of the Romanian economy, the authorities' program sustains prudent macroeconomic policies, and includes a strengthening of the finances of state-owned enterprises through energy price adjustments and wage restraint, and the wide-ranging structural reforms necessary to prepare the economy for EU accession. The authorities have appropriately tightened fiscal policy in response to the recent strengthening of domestic demand, and implemented measures to slow rapid credit growth.
"The 2005 budget will introduce a far-reaching tax reform. Cuts are envisaged in the profit, income, and social security taxes, while excises will increase substantially, in line with EU requirements. To avoid risking the achievement of the 2005 deficit target, the fiscal impact of the tax reform will need to be monitored closely and revenue collections further strengthened. The budget includes welcome measures to restrain expenditures, particularly on subsidies. Looking forward, expenditures will need to be carefully prioritized to make room for EU accession-related investment spending.
"Monetary policy continues to aim at achieving gradual disinflation and averting excessive real appreciation. The scope for further interest rate cuts depends on prospects for sustained reduction in inflation. To address pressures from strong capital inflows, the National Bank of Romania has appropriately decided to allow more flexibility of the exchange rate. The authorities have moved quickly to curb rapid expansion in foreign-currency denominated credit and stand ready to take further measures, if necessary, supported by efforts to improve banking supervision.
"The authorities are confronting long-standing problems of tax arrears and a lack of hard budget constraints on state-owned enterprises. Regarding arrears, they are taking measures against private companies, including forced collection and bankruptcy procedures. For the state-owned enterprises, they need to proceed with downsizing the loss-making mining and railway sectors, supported by assistance for retraining and relocation. The privatization program will proceed, with future efforts concentrating on the energy sector. Continued adjustment of electricity and heating prices in line with costs, and adjustment of producer gas prices to import parity will be crucial for strengthening the finances of the sector.
"In 2004, the authorities have implemented important measures to improve the business climate. These include stepped-up efforts to improve governance by fighting corruption and ongoing reform of the judiciary, and a planned review of the labor code in 2005, with a view to improving flexibility in labor markets," Mr. Carstens said.
(source: IMF)