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Romania February 2011
Romania February 2011
Romania February 2011
Romania
February 2011
Economist Intelligence Unit 26 Red Lion Square London WC1R 4HQ United Kingdom
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Executive summary
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Highlights
Country snapshot
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Basic data Political structure
Joan Hoey (editor); Matteo Napolitano (consulting editor) February 10th 2011 Tel: (44.20) 7576 8000 E-mail: london@eiu.com To request the latest schedule, e-mail schedule@eiu.com
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SLOVAKIA UKRAINE
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Suceava
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HUNGARY
Zalau Dej Bistrita Oradea Cluj-Napoca Turda Tirgu Mures Miercurea-Ciuc Onesti Barlad Bacau Vaslui
UKRAINE
Arad
R. M u res
Sfantu Gheorghe Focsani Galati Braila Buzau Ploiesti Tirgoviste Urziceni Slobozia Tulcea
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ROMANIA
Transylvanian Alps
Rimnicu Valcea Tirgu Jiu Pitesti
Resita
Main railway
R. Danub e
Main road
Drobeta-Turnu Severin Slatina Craiova
International boundary
BUCHAREST
R. Danub e
Main airport
Constanta
Capital
SERBIA
Calafat Alexandria Turnu Magurele Giurgiu
n R. Da ube
Major town
Other town
150 100 200
BLACK SEA
0 km
50
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50
BULGARIA
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Executive summary
Highlights
February 2011
Outlook for 2011-15 The government, comprising the Democratic Liberal Party (DLP) and the Hungarian Union of Democrats in Romania (HUDR), is likely to face further challenges to its rule until the election in 2012. An early election is possible. The formation of a three-party opposition alliance to contest the next election increases the likelihood of a more stable, majority government in 2012-15. Continuing austerity measures in 2011 will increase popular dissatisfaction with the government and the risk of social unrest cannot be discounted. A new, two-year agreement with the IMF will commit the authorities to reforming the public sector, improving absorption of EU funds and improving the business environment by reducing red tape and bureaucracy. The IMF will allow a consolidated budget deficit equivalent to 4.4% of GDP in 2011, but this must be narrowed to 3% of GDP by 2012. The Economist Intelligence Unit expects these targets to be missed, but not by a great margin. We estimate a contraction in real GDP of 2% in 2010. We forecast that positive growth, of 1%, will return in 2011 and will average 4.5% per year thereafter. After shrinking to the equivalent of about 4.6% in 2010, the current-account deficit is expected to stabilise at 5% of GDP in 2011-15. Monthly review In December 2010 the government managed to pass all the legislation necessary for completion of the sixth review of the stand-by agreement with the IMF and the release of the seventh loan tranche. In January 2011 the opposition National Liberal Party (NLP) and Conservative Party (CP) formed the Centre-Right Alliance (ACD). In February the ACD and the Social Democratic Party (SDP) created the Social Liberal Union (USL). The public finances improved in the fourth quarter of 2010, after the tightening of the governments austerity programme, and the full-year budget deficit came in below target, at the equivalent of 6.8% of GDP. The National Bank of Romania (NBR, the central bank) kept the monetary policy rate unchanged at 6.25% in January and February, as inflationary pressures persist. Data on retail sales, industrial output and construction for October-November provided few indications that economic recovery was under way in the fourth quarter. The current-account deficit rose year on year in 2010 in euro terms, to 5.2bn (US$7.2bn), but declined in US dollar terms.
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intention of taking action to suspend or impeach the president, Traian Basescu, if he does not co-operate with a USL government. It is also possible, particularly if the HUDR left the government, that the USL could form a government before the scheduled election in 2012. Mr Basescu will be unable to stand for a further term of office in 2014, assuming that he survives attempts to remove him. The DLP is unpopular and has no obvious candidate to succeed Mr Basescu, who has been promoting the case of the foreign minister, Teodor Baconschi. International relations Romania's main foreign policy priority for 2011 is to join the visa-free Schengen area. This is being thwarted by opposition from France in particular, which has waged a diplomatic campaign to persuade others, including Germany, to block membership for both Romania and Bulgaria. In January the French minister for European affairs, Laurent Wauquiez, declared that Romanian and Bulgarian membership of the Schengen area would threaten EU security because of doubts about their ability to manage their borders. Thomas de Maizire, the German interior minister, stated that Romanian and Bulgarian membership would be premature because of corruption, organised crime and failings in their judicial systems. Regardless of Romania's many shortcomings on these issues, making a link between Schengen membership and fulfilment of reforms required under the co-operation and verification mechanism to deny Romania entry is tantamount to changing the criteria on entry conditions. Accession to the Schengen area is a process meant to be governed by strict technical criteria, but subject to a political decision by all Schengen member states. All Schengen inspection missions to Romania have confirmed that the country fulfils the technical criteria (Bulgaria has yet to do so). Romania has spent large sums around 1bn (US$1.3bn)securing its borders, and the mission reports state that the equipment and training of border guards are "state of the art". Hungary, which assumed the EU presidency in January 2011, says that Schengen membership for Romania and Bulgaria is a priority. However, with France and Germany objecting, membership will almost certainly be delayed. There is a chance that Romania and Bulgaria could both join in October, especially if Romania receives a favourable co-operation and verification mechanism report from the European Commission in February. The Schengen dispute has brought home the painful reality to Romania that it does not yet enjoy full EU membership, as confirmed by the co-operation and verification mechanism arrangement. Romania and other smaller EU states are also chafing at the prospect of increased Franco-German dominance over some EU decisions. So far, Romania has refrained from joining groupings of other member states that aim to represent the interests of the smaller members, but that may change as tensions inside the EU increase. These tensions are likely to come to the fore in future debates over the EU budget, structural and cohesion funds, and the common agricultural policy (CAP). In 2011-15 Romania will proceed with plans to host components of NATO's antiballistic missile defence system. The equipment will consist of ground
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interceptors. Although Romania is not expected to host radar equipment, SM-3 missiles to intercept incoming ballistic missiles could be launched from Romanian territory. Work on installation will start in 2011 and the programme will become operational in 2015. The move may aggravate Romania's already difficult relations with Russia, despite Mr Basescu's insistence that hosting components of the shield is not a measure directed against Russia, but one aimed at protecting Romania from "other threats".
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A sober macro-economic outlook The IMFs assessment of macroeconomic performance continues to be subject to significant uncertainties. The Fund expects that growth will reach 1.5% in 2011, following an estimated contraction of 1.9% in 2010. Domestic demand is expected to be sluggish in 2011, following falls in public-sector wages and the increase in value-added tax (VAT), but improving domestic demand, alongside strong export growth, is set to be the main driver of growth from 2012 onwards. In 2012-15 real GDP is forecast to grow faster than the 3-3.5% growth in potential output, closing the gap between actual and potential output. IMF forecasts of economic performance
(% of GDP unless otherwise indicated) GDP (% change, year on year) Current-account balance External debt General government revenue General government expenditure General government balance Public sector debt Foreign-currency-denominated 2009 -7.1 -4.2 69.2 31.8 39.2 -7.4 28.2 15.2 2010 -1.9 -5.1 78.7 32.6 39.4 -6.8 33.9 20.1 2011 1.5 -5.5 81.6 32.9 37.3 -4.4 36.2 23.8 2012 4.4 -5.9 74.4 33.1 36.1 -3.0 35.9 21.4 2013 4.2 -5.5 66.3 32.7 35.2 -2.5 35.1 17.7 2014 4.2 -5.3 58.7 31.8 33.7 -1.9 33.8 14.3 2015 4.2 -5.2 51.1 31.2 32.7 -1.5 31.9 10.7
Source: IMF sixth and seventh reviews under the stand-by arrangement, January-February 2011.
Year-end inflation is expected to fall from 8% in 2010 towards the target, set by the National Bank of Romania (NBR, the central bank), of 3% (1%) during 2011. However, upside risksincluding the impact of rising world food and energy prices, and downward pressure on the leuoutweigh downside inflation risks. The central bank is not expected to resume monetary easing until there are clear signs that inflation risks are fully under control. After the seventh review, the Fund said that it expected the current-account deficit to contract from 5.5% of GDP in 2010 to around 5% in 2011-12, slightly below its forecasts at the time of the sixth review, around the long-term norm of 5.2%.
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Fiscal policies and public finance The IMF expects that the impact of the fiscal policies introduced in 2010including cuts to public-sector wages and employment, the freezing pensions, the expansion of healthcare contributions to certain pensioners and the elimination of heating subsidieswill reduce the fiscal deficit to 4.4% of GDP in 2011, with the structural deficit falling below 2% of GDP, from 9% in 2009. However, the IMF admits that there will be severe problems of implementation. General government revenue is not forecast to grow substantially over the period and the burden of fiscal adjustment will be borne by cuts in public expenditure, which is targeted to fall from 39.2% of GDP in 2009 to 32.7% of GDP in 2015. Public-sector debt is forecast to peak at 36.2% of GDP in 2011 and to fall as a proportion of GDP, to 31.9% in 2015. The IMF expects Romanias capacity to repay Fund credits to be strong. Outstanding credits peaked at 36% of reserves in 2010. Payments will peak at 11.7% and 12% of gross reserves in 2013-14. Total external debt is expected to peak at 81.6% of GDP in 2011, but will fall to more manageable proportions as economic growth takes hold in 2012-15. Fiscal policy The government's crisis measures contributed to an improvement in publicsector finances in the second half of 2010, mainly as a result of increased valueadded tax (VAT) revenue. Cuts in public-sector wages were largely offset by increased expenditure on social security, but cuts in public-sector investment helped. Parliament approved the 2011 austerity budget in December and also approved reforms to public-sector wages, which should help to restrict expenditure. The government plans to reduce the consolidated budget deficit from 4.4% of GDP in 2011 to 3% in 2012 and to 2.5% in 2013, but these targets are predicated on ambitious growth forecasts and improved receipts from the EU. Public-sector wages will be cut from the equivalent of 8.3% of GDP in 2010 to 6.6% in 2013. The government will also take steps to improve revenue collection and to widen the tax base. We expect the consolidated government budget to record deficits slightly exceeding these targets in 2011-13, but, barring a collapse in policy, we expect the deficit to shrink to 2.6% of GDP in 2015, aided by increased budget finance from the EU. A longer-term concern is that the recession in 2009-10 drove employees out of the formal economy into the grey economy and family employment, where tax collection is lowa trend that may be hard to reverse as the economy recovers. Monetary policy The National Bank of Romania (NBR, the central bank) operates an inflationtargeting regime with a year-end target of 3% for 2011 and 2012 (1 percentage point). It has established multi-annual targets of 2.5% (1 percentage point) for 2013 onwards. The NBR expects year-end inflation to fall from 8% in 2010 to 3.4% in 2011, dropping below 3% in 2012, provided that fiscal consolidation continues. Consequently, we do not expect further reductions in interest rates in the short term. The NBR reduced its monetary policy rate by 175 basis points in January-May 2010, to 6.25%, but has since left the rate unchanged because of concerns about the continuation of inflationary pressures. However, we expect the NBR to relax its monetary policy in 2012-15 as inflation falls. Romania is likely to delay adoption of the euro, scheduled for 2015, by one or two years as it struggles to meet the convergence criteria.
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Economic forecast
International assumptions
2010 2011 Economic growth (%) US GDP 2.8 2.7 Euro area GDP 1.7 1.5 EU27 GDP 1.9 1.6 World GDP 3.8 3.0 World trade 12.4 6.4 Inflation indicators (% unless otherwise indicated) US CPI 1.6 1.2 Euro area CPI 1.4 1.2 EU27 CPI 1.8 1.8 Manufactures (measured in US$) 3.2 0.8 Oil (Brent; US$/b) 79.6 90.0 Non-oil commodities (measured in US$) 24.0 13.9 Financial variables US$ 3-month commercial paper rate (av; %) 0.2 0.3 3-month rate 0.8 1.0 US$: (av) 1.33 1.25 Lei:US$ (av) 3.18 3.30 Lei: (av) 4.21 4.13 2012 2.2 1.3 1.6 3.0 6.3 2.0 1.5 1.8 0.1 82.3 -6.2 2013 2.4 1.5 1.7 3.1 6.7 2.5 1.6 1.9 1.8 78.3 -4.9 2014 2.5 1.8 1.8 3.1 6.7 2.8 1.7 2.0 1.2 75.5 1.1 2015 2.4 2.1 1.9 3.1 6.0 2.8 1.9 2.1 1.8 76.0 0.0
Economic growth
Romania was one of the last EU economies to enter recession, with quarter-onquarter growth turning negative only in the third quarter of 2008. It will also be one of the last EU economies to exit recession and make a sustained recovery. Real GDP fell by 7.1% year on year in 2009 and is estimated to have contracted by a further 2% in 2010. Real GDP fell by 2.3% year on year in the first three quarters of 2010 (adjusted for seasonality and the number of working days), after falling by 0.7% quarter on quarter in July-September and by 2.2% year on year. Aggregate demand in the first three quarters was entirely sustained by stockbuilding, whereas all other components of aggregate demand declined. Quarter-on-quarter growth is expected to have been flat, at best, in October-December. We expect the economy to return to growth of around 1% in 2011, but the recovery will lag behind most of the EU. We forecast an acceleration in 2012, to 4.4% real GDP growth, and expect economic expansion to average 5.2% per year in 2013-15. The growth of gross fixed capital formation and planned infrastructure investment should stimulate a recovery in the depressed construction sector, but prospects for a recovery in the housing market are not good. Although domestic demand will be hampered by progressive fiscal tightening, which will also dampen government spending over the forecast period, we consider that these growth targets are attainable, particularly if Romania improves its absorption of available EU funding. Improved absorption capacity would contribute to essential investment in infrastructure, which would improve export potential. With the exception of 2011-12, we forecast slightly faster growth rates than those predicted by the IMF, with growth back to Romania's long-term potential of around 5% in 2013-15. In the short run, however, demand in the country's main EU export markets will remain weak,
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implying modest annual expansions in the trade deficit (in absolute terms), which will be financed by improved absorption of EU funding.
Economic growth
% GDP Private consumption Government consumption Gross fixed investment Exports of goods & services Imports of goods & services Domestic demand Agriculture Industry Services 2010 a -2.0 -1.7 -2.0 -14.0 19.7 15.6 -0.7 -4.5 -3.0 -0.5 2011 b 1.0 1.6 -1.0 7.0 14.0 11.1 1.5 3.0 5.0 -2.1 2012 b 4.4 4.9 2.0 8.0 9.9 9.2 5.0 2.0 7.0 3.1 2013 b 4.9 5.4 2.3 8.0 9.4 9.7 6.0 2.0 8.0 3.2 2014 b 5.1 6.1 2.0 10.0 9.0 10.1 6.8 3.0 6.0 5.0 2015 b 5.5 6.5 2.0 12.0 12.2 13.1 7.7 4.0 5.0 6.4
Inflation
We forecast a slowdown in inflation in 2011-15, but do not expect it to fall to west European levels within the forecast period. Year-end inflation reached 8% in 2010, following price increases of 5.1% in the second half of the year, with food prices rising by 5.7% over the same period, putting further pressure on household budgets and leading to calls for compensating wage increases. The annual average rate of inflation for 2010 was 6.1%. Provided that fiscal and incomes policies remain tight in 2011 and that wage growth is curtailed, inflation should fall to around 3.5% by the end of the year, inside the central bank's target band. We expect inflation to come down gradually thereafter, dropping to 2.4% by December 2015, as Romania strives to meet the conditions for entry into the EU's exchange-rate mechanism (ERM2). The leu fell to a low of Lei4.37:1 (Lei3.56:US$1) at the end of June 2010, indicating the fragility of confidence in the local currency, but appreciated against both currencies in the second half. The leu fell by 1.2% against the euro and by 8.8% against the US dollar in 2010 to reach Lei4.28:1 and Lei3.20:US$1 on December 31st, averaging Lei3.18:US$1 and Lei4.21:1 over the year as a whole. The central bank intervened to offset downward pressure on the leu in late November, as the crisis in Ireland intensified. The currency could remain vulnerable to a loss of investor confidence if the government failed to carry through IMF-mandated fiscal policy reforms, or if there was a contagion effect as a result of a renewed crisis in the weaker euro zone states. The leu is expected to appreciate in real terms against a trade-weighted basket of currencies in 2011-15, in line with productivity differentials. The current-account deficit increased by 5% year on year in euro terms in 2010, to 5.2bn from 4.9bn, but shrank in US dollar terms to an estimated US$7.2bn (equivalent to an estimated 4.6% of GDP) as a result of currency movements. Export growth outpaced import growth, and the merchandise trade deficit in shrank from 6.9bn in the year-earlier period to 5.9bn. The surplus on current transfers fell from 4.2bn to 3.4bn. The deficit is forecast to stabilise at around 5% of GDP in 2011-15, as the surplus on current transfers improves as a result of increased current inflows from the EU and workers' remittances. The deficit on
Exchange rates
External sector
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incomes is forecast to expand as profits on foreign direct investment (FDI) improve, and the services deficit will also rise. Net FDI inflows fell by about 25% year on year in 2010 to 2.6bn, and covered 50.3% of the current-account deficit. We forecast a gradual recovery in FDI receipts from 2011, as economic growth and confidence return.
Forecast summary
(% unless otherwise indicated) Real GDP growth Industrial production growth Gross agricultural production growth Unemployment rate (end-period) Consumer price inflation (av; national measure) Consumer price inflation (end-period; national measure) Consumer price inflation (av; EU harmonised measure) Commercial bank lending rate Consolidated budget balance (% of GDP) Exports of goods fob (US$ bn) Imports of goods fob (US$ bn) Current-account balance (US$ bn) Current-account balance (% of GDP) External debt (end-period; US$ bn) Exchange rate Lei:US$ (av) Exchange rate Lei:US$ (end-period) Exchange rate Lei: (av) Exchange rate Lei: (end-period) 2010 a -2.0 5.5 -4.5 6.9 6.1 c 8.0 c 6.1 14.1 -6.8 49.9 57.8 -7.2 -4.6 120.1 3.18 c 3.20 c 4.21 4.28 2011 b 1.0 5.0 3.0 7.2 5.1 3.5 5.1 13.0 -4.8 56.6 64.1 -7.8 -4.9 123.4 3.30 3.28 4.13 3.94 2012 b 4.4 6.0 2.0 6.7 3.4 3.1 3.4 10.0 -3.5 62.0 69.3 -8.3 -4.8 126.6 3.34 3.29 4.01 3.91 2013 b 4.9 7.0 2.0 6.4 3.3 3.0 3.3 8.0 -3.3 69.4 77.1 -9.8 -5.1 129.8 3.34 3.28 3.94 3.84 2014 b 5.1 5.0 3.0 6.2 2.9 2.6 2.9 6.0 -3.0 77.6 86.3 -10.6 -5.0 130.6 3.32 3.27 3.85 3.81 2015 b 5.5 4.0 4.0 5.8 2.5 2.4 2.5 7.0 -2.6 90.7 101.5 -12.4 -5.2 135.6 3.28 3.22 3.84 3.79
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Antonescu, the leader of the ACD, announced that the standing bodies of the two parties would vote on a formal alliance on February 5th. Agreement was reached on such an alliance, which will put forward joint candidates for forthcoming local and parliamentary elections, and for some mayoral elections. The purpose of the move is to oust the DLP government, either before or after the parliamentary election scheduled for the end of 2012.
Romanias prospects of joining the Schengen area, which eliminates border controls between participating states, are diminishing in the face of strong opposition from France and Germany, supported by other members, including Finland and the Netherlands. Membership of the Schengen area (to which the
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eight former communist countries that acceded to the EU in 2004 were admitted in 2007) is Romanias leading foreign policy objective for 2011. Romania and Bulgaria were initially scheduled to join in March 2011, but their accession has been delayed by opposition, led at the highest level by France, which has lobbied other member states to support its stance, and which began a campaign to block entry for Romania and Bulgaria in December 2010. In January 2011 the French minister for European affairs, Laurent Wauquiez, requested more time to assess technical evaluation reports for Romanian and Bulgarian entry, further slowing the accession process. Romanian officials expressed their concern that Mr Wauquiez has not requested further information directly from them. The Ministry of Foreign Affairs invited him to pay an official visit to assess Romanias ability to implement Schengen regulations, which include strengthening border controls against non-member states, particularly at the border with Moldova. Mr Wauquiez has argued that Romania and Bulgaria are responsible for high levels of illegal immigration and trafficking in arms, drugs and children. Mr Wauquiez was joined by the Finnish minister for European affairs, Astrid Thors, in a press conference on January 20th, at which it was stated that Romanian and Bulgarian membership of the Schengen area would threaten European security. The German interior minister, Thomas de Maizire, stated on the same day that Romanian and Bulgarian membership would be premature, not on technical grounds, but because of the levels of corruption, organised crime and failings of the judicial system, which have been repeatedly criticised in EU reports under the co-operation and verification mechanism. Germany and France have argued that sensitive Schengen data should not be made available to Romania before these problems have been resolved. Hungary, which holds the EU presidency until end-June, has stated that Romania has met the technical requirements for entry (Bulgaria still has problems relating to border controls with Turkey) and on that basis should be allowed to join. The European Peoples Party (EPP) in the European Parliament has asked that the evaluation reports, which indicate that Romania has met all technical requirements of membership, be declassified to allow the European Parliament to analyse them. As the timetable for entry slips, however, it seems that Romania is unlikely to join until later in 2011 at the earliest.
Economic policy
The IMF releases seventh tranche of stand-by agreement The IMF released the seventh tranche of the stand-by arrangement, worth SDR769m (US$1.2bn) on January 11th, after the IMF board completed its sixth review of Romania's economic performance under the agreement. The IMF board approved waivers regarding the failure to observe the end-2010 target for government arrears to the private sector and the year-end inflation target. The IMF observed that policy implementation under the programme remained strong, but expressed concern at the slow progress in eliminating domestic arrears. The report released in January noted that progress in privatisation and eliminating losses of state-owned enterprises (SOEs) was limited, and that absorption of EU funding lagged behind other EU countries. The IMF also
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indicated that bold reforms to the healthcare system are critical to the progress of fiscal consolidation and eliminating government arrears to the private sector. In addition, the World Bank approved the release of the second 300m (US$475m) instalment of its 1bn (US$1.3bn) development programme loan (DPL), which is part of the 19.5bn multilateral credit agreement. It is expected that the final 400m instalment will now be released as part of a new agreement, following payment delays caused by the failure to meet programme targets. IMF, World Bank and EU missions arrived in the capital, Bucharest, on January 25th for the seventh review of the stand-by arrangement and to negotiate a new agreement to replace the current one, which expires at the end of April. On February 8th the Fund announced a staff-level deal on a new two-year agreement, linked to further progress in structural reforms, which will run beyond the next parliamentary election. The agreement will focus on raising the efficiency of large, loss-making SOEs, with a view to eventual privatisation. The mission also reached agreement on the seventh and final review, paving the way for the release of the eighth and final disbursement, worth about 1bn, under the current agreement. However, the authorities have said that they do not intend to draw on the funds. Total disbursements under the current standby arrangement amount to SDR10.6bn (US$16.1bn). The budget deficit falls to 6.51% of GDP in 2010 Data from the Ministry of Finance indicate that the budget deficit fell to Lei33.3bn (US$10bn) in 2010, equivalent to 6.51% of officially estimated annual GDP (or 6.8% on the basis of the Economist Intelligence Unit's estimate of GDP), compared with 7.4% in 2009. Revenue grew by 7.2% year on year, to Lei168.6bn, equivalent to 33% of GDP, and expenditure rose by 4.2% year on year, to Lei201.9bn, equivalent to 39.5% of GDP.
Consolidated budget, 2010
2009 Lei bn 157.2 34.3 47.9 1.9 30.6 15.6 193.7 46.8 28.3 64.0 6.1 21.9 -36.4 % GDP 32.0 7.0 9.7 0.4 6.2 3.2 39.4 9.5 5.8 13.0 1.2 4.6 -7.4 2010 Lei bn 168.6 39.2 45.7 5.4 28.9 17.4 201.9 42.8 29.8 68.6 7.3 19.4 -33.3 % GDP 33.0 7.7 8.9 1.1 5.7 3.4 39.5 8.4 5.8 13.4 1.4 3.8 -6.51 % growth 7.2 14.3 -4.6 181.5 -5.4 11.5 4.2 -8.6 5.2 7.3 20.0 -11.7 -
Revenue Value-added tax (VAT) Insurance contributions Receipts from EU Income & profits taxes Excise duties Expenditure Personnel Goods & services Social assistance Interest Capital investment Balance
Source: Ministry of Finance.
The main factors contributing to the growth of revenue were receipts of valueadded tax (VAT), which grew by 14.3% to count for 7.7% of GDP, and receipts from the EU, which grew from 0.4% of GDP in 2009 to 1.1% of GDP in 2010. However, the recession meant that revenue from social insurance contributions
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fell by 4.6%, from 9.7% of GDP in 2009 to 8.9% in 2010, and revenue from incomes and profits taxes fell by 5.4%, from 6.2% of GDP to 5.7%. Public-sector wage costs fell by 8.6%, to 8.4% of GDP, compared with 9.5% in 2009, and capital investment was cut by 11.7%, to 3.8% of GDP in 2010, compared with 4.6% in 2009. However, social insurance payments rose by 7.3%, from 13% of GDP in 2009 to 13.4% in 2010. Interest payments also rose, from 1.2% of GDP in 2009 to 1.4%. Monetary policy remained tight in 2010 The National Bank of Romania (NBR, the central bank) left its monetary policy rate unchanged at 6.25% at its meetings in January and February 2011. The monetary policy rate has now been unchanged since May 2010. The NBR estimates that year-end inflation, which reached 8% in 2010, will fall to 3.4% by end-2011 as the impact of an increase of 5 percentage points in VAT, which took place in July 2010, falls out of the system. However, the NBR is concerned that rising global food and oil prices, in combination with the second-order effects of the VAT increase, could heighten inflationary expectations, and it warned of the need to maintain a prudent monetary policy stance.
Consumer price inflation
(% change, year on year)
8.5 8.0 7.5 7.0 6.5 6.0 5.5 5.0 4.5 4.0 Jan 2009 Mar May Jul Sep Nov Jan 10 Mar May Jul Sep Nov
Broad money (M3) grew by 6.9% in 2010, roughly in line with the estimated growth in nominal GDP, to Lei202.8bn, with intermediate money (M2) growing by 6.2% and narrow money (M1) by 2.8%. Credit growth was also modest in 2010, although loans to the corporate sector grew substantially faster than those to households, with banks concentrating on credits denominated in foreign currencies and deposits denominated in leu. Lending to the private sector grew by 4.7% in 2010 (a fall of 3% in real terms) to Lei209.3bn (equivalent to 41% of GDP). Credits denominated in foreign currencies grew by 9.8% in leu terms, while credits denominated in leu fell by 3%. Loans to households grew by 1.9% to Lei100.2bn, and loans to the corporate sector by 7.6% to Lei107bn. Loans to the corporate sector denominated in foreign currencies grew by 11.9% to Lei65.8bn, equivalent to 12.8% of GDP. Deposits of non-government resident customers grew by 5.8% to Lei177.4bn, resulting in a reduction in the loans-to-deposits ratio to 118% at the end of 2010, from 119% at the end of 2009. Deposits denominated in leu grew by 10.8% to Lei113.5bn, accounting for 64% of the total. As a result, the ratio of credits to
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deposits denominated in foreign currency grew from 185% at end-2009 to 206% at end-2010, with credits exceeding deposits by Lei68bn. Loans to the corporate sector denominated in foreign currency exceeded deposits by Lei41.6bn.
Monetary aggregates, Dec 2010
Broad money (M3) Non-government credits In leu In foreign exchange To household sector To corporate sector Deposits of non-government residents In leu In foreign exchange By household sector By corporate sector
Source: National Bank of Romania.
Lei bn 202.8 209.3 77.4 131.9 102.1 107.2 177.4 113.5 63.9 104 73.4
% change 6.9 4.7 -3.0 9.8 1.9 7.6 5.8 10.8 -1.7 6.9 4.4
% GDP 39.6 40.9 15.1 25.8 19.9 20.9 34.7 22.2 12.5 20.3 14.3
Economic performance
There are few signs of recovery in the fourth quarter Data on retail sales, industrial output and construction for November provided few indications that the economy was undergoing recovery in the fourth quarter. Although registered unemployment continued to fall in November and December, this was accompanied by further falls in the number of registered employees. Retail sales (excluding sales of cars and motorbikes, and adjusted for seasonality and the number of working days) fell by 1.3% month on month in November (following a fall of 3.5% in October) and by 7.6% year on year. Retail sales (adjusted) fell by 5.3% year on year in January-November. Sales of non-food goods (adjusted) fell by 1.7% month on month in November (following a monthly fall of 4.6% in October) and by 14.6% year on year. They declined by 8% in January-November. Sales of food goods, alcohol and tobacco rose by 2.8% month on month (adjusted) in November, but fell by 5.5% year on year, and by 7.3% in January-November. Petrol sales fell by 2.7% month on month in November (adjusted), but rose by 6.8% year on year; they rose by 3.8% year on year in January-November. Sales and repairs of cars and motorbikes, and paid services to the population, both rose for the fourth consecutive month on an adjusted basis in November. Sales and repairs of cars and motorbikes (adjusted) rose by 5.5% month on month and by 8.8% year on year in November, but fell by 9.2% in January-November 2010. Paid services to the population rose by 1.6% month on month, by 19.1% year on year in November and by 12.5% in January-November. Industrial output, adjusted for seasonality and the number of working days, grew by 1.6% month on month, by 4% year on year in November and by 3.8% year on year in January-November. Manufacturing output rose by 2.1% month on month in November and by and by 4.6% year on year in January-November. However, construction (adjusted for seasonality and the number of working days) continued to decline in November, falling by 4.6% month on month and
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by 18.9% year on year, taking the annual fall in construction in JanuaryNovember to 15.1%. Wages rise for the first time in eight months in November The average net wage grew by 2.2% month on month in November 2010 (the first monthly increase since March), to Lei1,377 (US$417), and by 0.8% year on year, equivalent to a fall in real wages of 6.4%. The average net wage in November was 8.7% below its peak in March 2010. Consumer prices rose by 5.1% between March and November. Public-sector wages clawed back some of their losses following cuts of more than 20% in July 2010, with average wages in November rising by 5.2% month on month in education, by 2.4% in administration and by 1.2% in sanitation. It is not clear how much this is the result of job losses among lower-paid personnel, who have been most affected by reductions in public-sector employment. Nevertheless, average wages in education were 16.5% below their June level, in administration by 17.1% and in sanitation by 17.4%.
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2006 a 122.7 345 7.9 11.4 3.5 19.3 10.6 22.4 3.3 10.0 7.7 21.5 10,485 5.2 31.0 32.7 -1.6 15.4 2.81 3.53 6.6 44.3 27.9 14.0 -14,836 32,336 -47,172 5 -4,079 6,125 -12,785 53,939 8,648 6,472 30,211
2007 a 170.6 416 6.0 10.2 7.4 28.9 8.7 26.1 -16.9 10.6 9.4 21.5 11,462 4.1 30.6 32.8 -2.3 17.5 2.44 3.34 4.8 64.0 34.0 13.3 -24,566 40,555 -65,121 530 -5,662 6,618 -23,080 84,033 11,565 8,325 39,956
2008 a 204.3 515 7.1 8.4 3.7 19.3 19.4 17.5 21.4 7.1 4.6 21.5 12,556 4.4 32.0 36.7 -4.8 19.5 2.52 3.70 7.8 15.8 17.3 15.1 -28,182 49,760 -77,942 951 -5,372 8,884 -23,719 104,943 18,585 14,475 39,468
2009 a 161.1 491 -7.1 -9.2 1.2 -25.3 -5.5 -20.5 -0.4 -6.9 -7.6 21.5 b 11,781 b 7.8 31.9 39.3 -7.4 28.2 3.05 4.25 5.6 -14.2 8.3 17.3 -9,482 40,713 -50,195 -497 -2,968 5,649 -7,298 111,368 b 16,702 b 11,966 b 44,107
2010 b 154.8 492 -2.0 -1.7 -2.0 -14.0 19.7 15.6 -4.5 -3.0 -0.5 21.4 11,614 6.9 34.3 41.0 -6.8 34.3 3.18 a 4.21 a 6.1 a 2.8 a 6.2 a 14.1 -7,894 49,915 -57,809 -998 -2,634 4,338 -7,187 120,058 15,775 12,795 48,075
2011 c 160.3 529 1.0 1.6 -1.0 7.0 14.0 11.1 3.0 5.0 -2.1 21.4 11,916 7.2 33.6 38.4 -4.8 36.9 3.30 4.13 5.1 -17.6 10.5 13.0 -7,544 56,600 -64,144 -702 -3,965 4,397 -7,814 123,357 15,762 12,873 49,732
2012 c 174.1 582 4.4 4.9 2.0 8.0 9.9 9.2 2.0 7.0 3.1 21.4 12,731 6.7 33.5 37.0 -3.5 35.8 3.34 4.01 3.4 11.4 8.8 10.0 -7,315 61,995 -69,309 -666 -5,099 4,777 -8,303 126,551 15,918 12,945 53,674
GDP Nominal GDP (US$ bn) Nominal GDP (Lei bn) Real GDP growth (%) Expenditure on GDP (% real change) Private consumption Government consumption Gross fixed investment Exports of goods & services Imports of goods & services Origin of GDP (% real change) Agriculture Industry Services Population and income Population (m) GDP per head (US$ at PPP) Recorded unemployment (av; %) Fiscal indicators (% of GDP) General government revenued General government expenditure General government balance Net public debt Prices and financial indicators Exchange rate Lei:US$ (av) Exchange rate Lei: (av) Consumer prices (av; %) Stock of money M1 (% change) Stock of money M2 (% change) Lending interest rate (av; %) Current account (US$ m) Trade balance Goods: exports fob Goods: imports fob Services balance Income balance Current transfers balance Current-account balance External debt (US$ m) Debt stock Debt service paid Principal repayments International reserves (US$ m) Total international reserves and social security budgets.
Source: IMF, International Financial Statistics.
a Actual. b Economist Intelligence Unit estimates. c Economist Intelligence Unit forecasts. d Consolidated government budget, including local
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Quarterly data
Pl ea se se e g ra p hi c b el ow
2009 1 Qtr General government finance (Lei bn; cumulative) Revenue Expenditure Balance Output Index of industrial production (2000=100) Index of industrial production (% change, year on year) Employment, wages & prices Employment, state sector (end-period; 000) Employment, state sector (% change, year on year) Unemployment rate (end-period; % of the labour force) Average gross wages (Lei per month) Average gross wages (% change, year on year) Consumer prices (2000=100) Consumer prices (% change, year on year) Producer prices (2000=100) Producer prices (% change, year on year) Financial indicators Exchange rate Lei:US$ (av) Exchange rate Lei:US$ (end-period) NBR reference rate (%; end-period) M1 (end-period; Lei bn)a M1 (% change, year on year) M2 (end-period; Lei bn)a M2 (% change, year on year) Sectoral trends Manufacturing index (2000=100) Manufacturing index (% change, year on year) Mining index (2000=100) Mining index (% change, year on year) Foreign trade (US$ m) Exports fob Imports cif Trade balance Balance of payments (US$ m) Merchandise trade balance fob-fob Services balance Income balance Net transfer payments Current account balance Reserves excl gold (end-period)
2 Qtr
3 Qtr
4 Qtr
2010 1 Qtr
2 Qtr
3 Qtr
4 Qtr
38.1 46.0 -7.9 108.5 -13.0 4,724 -1.6 5.6 1,875 17.1 125.9 6.8 141.0 5.8 3.28 3.19 10.2 81.46 -1.4 174.88 15.2 110.1 -15.2 91.6 -1.8 8,577 11,460 -2,883 -2,010 -77 -680 1,574 -1,193 33,393
39.2 45.7 -6.5 118.1 -8.2 4,618 -4.3 6.0 1,891 9.2 127.1 6.1 141.7 1.7 3.08 2.98 9.9 81.71 -10.1 179.48 11.2 125.5 -8.8 81.8 -17.5 9,573 12,918 -3,345 -2,344 -37 -927 1,234 -2,074 37,370
38.5 49.7 -11.2 118.8 -4.3 4,505 -6.8 6.9 1,869 6.8 127.2 5.0 142.5 -1.3 2.95 2.86 9.0 80.58 -13.0 182.53 10.0 124.5 -5.4 90.1 -15.2 10,889 14,435 -3,547 -2,407 -170 -628 1,669 -1,536 41,565
40.9 51.7 -10.8 122.3 4.0 4,368 -7.8 7.8 1,923 1.9 128.7 4.6 143.8 1.8 2.89 2.94 8.2 79.36 -14.2 188.01 8.3 126.4 4.2 91.2 -12.5 11,635 15,659 -4,024 -2,721 -213 -733 1,172 -2,495 40,757
37.5 45.8 -8.2 113.2 4.3 4,303 -8.9 8.4 1,994 6.3 131.7 4.6 146.0 3.5 2.97 3.04 7.6 76.46 -6.1 187.82 7.4 114.6 4.1 80.2 -12.4 10,913 13,737 -2,824 -1,672 -387 -733 625 -2,167 43,133
39.7 49.5 -9.9 126.2 6.8 4,264 -7.7 7.5 1,962 3.8 132.7 4.4 150.3 6.1 3.29 3.56 6.6 80.50 -1.5 192.28 7.1 134.7 7.3 77.1 -5.7 11,761 15,361 -3,601 -2,302 -173 -954 788 -2,641 38,790
43.2 48.4 -5.3 124.1 4.5 4,194 -6.9 7.4 1,853 -0.8 136.8 7.5 152.7 7.2 3.30 3.13 6.3 81.50 1.1 192.59 5.5 130.8 5.1 86.0 -4.6 12,514 15,255 -2,740 n/a n/a n/a n/a n/a 44,483
48.2 58.2 -10.0 130.0 6.3 n/a n/a 6.9 1,938 0.8 138.8 7.9 n/a n/a 3.15 3.20 6.3 81.60 2.8 199.59 6.2 135.5 7.2 87.0 -4.6 14,144 17,482 -3,338 n/a n/a n/a n/a n/a 43,361
a From January 2007 the National Bank of Romania has redefined monetary aggregates in compliance with European Central Bank methodology.
M1 and M2 data since January 2007 are not consistent with the earlier series.
Sources: National Bank of Romania; National Commission for Statistics, Monthly Statistical Bulletin; IMF, International Financial Statistics .
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Monthly data
Pl ea se se e g ra p hi c b el ow
Jan Feb Mar Apr May Exchange rate Lei:US$ (av) 2009 3.20 3.35 3.29 3.18 3.06 2010 2.90 3.01 3.01 3.08 3.32 2011 3.19 n/a n/a n/a n/a Exchange rate Lei: (av) 2009 4.23 4.28 4.28 4.20 4.17 2010 4.14 4.12 4.09 4.13 4.17 2011 4.26 n/a n/a n/a n/a Real effective exchange-rate index (CPI-based; 1997=100) 2009 149.31 149.04 150.99 153.69 154.63 2010 158.25 157.82 158.31 156.39 153.20 2011 n/a n/a n/a n/a n/a Budget revenue (Lei bn) 2009 15.1 10.9 12.1 15.2 12.0 2010 14.0 11.2 12.3 15.1 11.6 2011 n/a n/a n/a n/a n/a Budget expenditure (Lei bn) 2009 13.4 15.9 16.7 16.6 14.0 2010 14.0 17.0 14.7 19.0 16.2 2011 n/a n/a n/a n/a n/a Budget balance (Lei bn) 2009 1.6 -5.0 -4.6 -1.4 -1.9 2010 0.0 -5.8 -2.4 -3.9 -4.5 2011 n/a n/a n/a n/a n/a Deposit rate (%)a 2009 14.0 14.4 14.5 14.2 13.5 2010 9.1 8.6 8.0 7.4 7.1 2011 n/a n/a n/a n/a n/a Lending rate (%)a 2009 17.9 18.1 18.2 18.1 17.7 2010 16.3 15.6 15.0 14.2 14.3 2011 n/a n/a n/a n/a n/a M1 (% change, year on year)b 2009 11.1 3.9 -1.4 -3.9 -7.0 2010 -12.9 -9.5 -6.1 -5.1 -1.5 2011 n/a n/a n/a n/a n/a M2 (% change, year on year)b 2009 19.2 17.5 15.2 11.9 12.1 2010 4.8 5.6 7.4 7.1 7.6 2011 n/a n/a n/a n/a n/a Industrial production (% change, year on year) 2009 -16.4 -14.5 -8.5 -10.0 -10.1 2010 6.1 -0.4 7.0 7.8 6.0 2011 n/a n/a n/a n/a n/a Retail sales (% change, year on year) 2009 -0.6 -9.1 -5.5 -10.5 -13.7 2010 -12.4 -8.2 -2.2 -5.8 -2.2 2011 n/a n/a n/a n/a n/a
Jun 3.00 3.47 n/a 4.21 4.24 n/a 153.67 150.34 n/a 12.0 13.0 n/a 15.1 14.4 n/a -3.1 -1.4 n/a 12.6 6.9 n/a 17.5 13.9 n/a -10.1 -1.5 n/a 11.2 7.1 n/a -4.5 6.8 n/a -16.4 4.6 n/a
Jul 2.99 3.34 n/a 4.22 4.26 n/a 152.97 153.99 n/a 15.0 16.1 n/a 18.2 18.0 n/a -3.2 -2.0 n/a 11.5 6.9 n/a 17.0 13.9 n/a -9.7 -1.9 n/a 11.9 5.8 n/a -4.1 3.3 n/a -12.8 -8.8 n/a
Aug 2.96 3.28 n/a 4.22 4.24 n/a 152.05 154.81 n/a 11.0 12.9 n/a 15.8 13.8 n/a -4.7 -0.9 n/a 10.5 6.8 n/a 16.7 13.6 n/a -9.0 -2.8 n/a 12.6 5.4 n/a -5.7 5.3 n/a -12.0 -1.9 n/a
Sep 2.91 3.26 n/a 4.24 4.26 n/a 152.66 154.46 n/a 12.5 14.1 n/a 15.7 16.5 n/a -3.3 -2.4 n/a 9.9 6.8 n/a 16.5 13.4 n/a -13.0 1.1 n/a 10.0 5.5 n/a -3.4 5.0 n/a -11.9 -2.2 n/a
Oct 2.89 3.08 n/a 4.28 4.28 n/a 151.96 155.94 n/a 15.4 16.5 n/a 15.3 16.8 n/a 0.1 -0.4 n/a 9.6 6.7 n/a 16.6 13.2 n/a -14.7 0.5 n/a 12.6 5.0 n/a -2.7 1.6 n/a -10.6 -8.6 n/a
Nov 2.87 3.14 n/a 4.29 4.29 n/a 152.45 155.33 n/a 12.2 13.7 n/a 16.5 16.8 n/a -4.2 -3.1 n/a 9.5 6.7 n/a 16.6 12.9 n/a -14.9 1.6 n/a 12.0 5.5 n/a 5.3 7.9 n/a -9.0 -6.9 n/a
Dec 2.90 3.24 n/a 4.22 4.29 n/a 154.00 n/a n/a 13.3 18.1 n/a 19.9 24.6 n/a -6.7 -6.5 n/a 9.4 6.7 n/a 16.6 12.7 n/a -14.2 2.8 n/a 8.3 6.2 n/a 11.6 9.9 n/a -8.6 -9.0 n/a
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Jan Feb Mar Apr BET stockmarket index (av; Sep 22nd 1997=1000) 2009 2,623 2,100 2,157 2,787 2010 5,066 5,167 5,733 5,944 2011 5,687 n/a n/a n/a Consumer prices (av; % change, year on year) 2009 6.7 6.9 6.7 6.5 2010 5.2 4.5 4.2 4.3 2011 n/a n/a n/a n/a Producer prices (av; % change, year on year) 2009 7.1 6.2 3.9 3.0 2010 3.3 2.9 4.5 5.6 2011 n/a n/a n/a n/a Average monthly wages (% change, year on year) 2009 12.3 20.7 18.4 10.2 2010 7.0 4.1 7.9 2.2 2011 n/a n/a n/a n/a Unemployment rate (% of the labour force) 2009 4.9 5.2 5.6 5.7 2010 8.1 8.4 8.4 8.1 2011 n/a n/a n/a n/a Total exports fob (US$ m) 2009 2,541 2,662 3,374 2,841 2010 3,300 3,507 4,105 3,881 2011 n/a n/a n/a n/a Total imports cif (US$ m) 2009 3,462 3,753 4,245 4,044 2010 3,975 4,397 5,365 5,066 2011 n/a n/a n/a n/a Trade balance fob-cif (US$ m) 2009 -921 -1,092 -870 -1,204 2010 -675 -890 -1,259 -1,185 2011 n/a n/a n/a n/a Foreign-exchange reserves excl gold (US$ m) 2009 33,501 32,853 33,393 33,107 2010 39,165 40,502 43,133 43,155 2011 n/a n/a n/a n/a
May 3,137 5,108 n/a 6.0 4.4 n/a 1.8 6.5 n/a 8.9 5.8 n/a 5.8 7.7 n/a 3,149 3,777 n/a 4,221 5,035 n/a -1,072 -1,258 n/a 37,804 39,347 n/a
Jun 3,467 4,927 n/a 5.9 4.4 n/a 0.2 6.2 n/a 8.6 3.4 n/a 6.0 7.5 n/a 3,583 4,103 n/a 4,653 5,260 n/a -1,070 -1,157 n/a 37,370 38,790 n/a
Jul 3,556 4,894 n/a 5.1 7.1 n/a -1.2 7.0 n/a 7.5 -1.7 n/a 6.3 7.5 n/a 3,946 4,327 n/a 4,732 5,166 n/a -786 -839 n/a 38,538 41,047 n/a
Aug 4,149 5,185 n/a 5.0 7.6 n/a -1.6 6.7 n/a 6.8 0.1 n/a 6.6 7.4 n/a 3,150 3,589 n/a 4,211 4,402 n/a -1,061 -812 n/a 39,652 40,026 n/a
Sep 4,332 5,180 n/a 4.9 7.8 n/a -1.2 7.9 n/a 6.2 -0.8 n/a 6.9 7.4 n/a 3,792 4,599 n/a 5,492 5,687 n/a -1,699 -1,089 n/a 41,565 44,483 n/a
Oct 4,473 5,247 n/a 4.3 7.9 n/a -0.9 7.8 n/a 4.8 -1.9 n/a 7.1 7.1 n/a 4,078 4,888 n/a 5,482 5,926 n/a -1,404 -1,038 n/a 42,172 44,607 n/a
Nov 4,735 5,152 n/a 4.7 7.7 n/a 2.1 8.1 n/a 1.2 n/a n/a 7.5 7.0 n/a 4,125 4,932 n/a 5,413 6,205 n/a -1,287 -1,273 n/a 43,253 42,768 n/a
Dec 4,750 5,160 n/a 4.7 8.0 n/a 4.2 n/a n/a 0.0 n/a n/a 7.8 6.9 n/a 3,432 4,324 n/a 4,765 5,352 n/a -1,333 -1,028 n/a 40,757 n/a n/a
a Break in series after January 2007. Average lending and deposit rates per annum, non-financial corporates and households, Lei-denominated outstanding transactions. b From January 2007 the National Bank of Romania has redefined monetary aggregates in compliance with European
Central Bank methodology. M1 and M2 data since January 2007 are not consistent with the earlier series.
Sources: National Bank of Romania; IMF, International Financial Statistics; Haver Analytics.
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Public debt
(% of GDP)
Romania 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 2006 07 08 09 10 11 12 -8.0 -10.0 -12.0 -14.0 East-central Europe World 0.0 -2.0 -4.0 -6.0
Current-account balance
(% of GDP)
Romania East-central Europe
2006
07
08
09
10
11
12
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Monetary aggregates
(% change, year on year)
Producer prices 80.0 70.0 60.0 50.0 40.0 30.0 20.0 10.0 0.0 -10.0 -20.0 M1 M2
Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2007 08 09 10
Source: Economist Intelligence Unit.
Government finances
(Lei bn)
Expenditure 30.0 25.0 20.0 15.0 10.0 5.0 0.0 -5.0 -10.0 -15.0 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2007 08 09 10
Source: Economist Intelligence Unit.
Exchange rate
(Lei:US$; av)
Balance 3.6 3.4 3.2 3.0 2.8 2.6 2.4 2.2 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan 2007 08 09 10 11
Source: Economist Intelligence Unit.
Revenue
Foreign trade
(US$ m; goods only)
Exports 10,000 8,000 6,000 4,000 2,000 0 -2,000 -4,000 -6,000 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2007 08 09 10
Source: Economist Intelligence Unit.
Foreign-exchange reserves
(US$ m)
Balance 46,000 44,000 42,000 40,000 38,000 36,000 34,000 32,000 30,000 Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct Jan Apr Jul Oct 2007 08 09 10
Source: Economist Intelligence Unit.
Imports
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200
5.0
10.0
15.0
20.0
25.0
Consumer prices
(% change, year on year)
Ukraine Uzbekistan Belarus Russia Turkmenistan Serbia Kazakhstan Kyrgyz Republic Tajikistan Romania Lithuania Hungary Latvia Poland Armenia Bulgaria Croatia Albania Georgia Slovakia Azerbaijan Czech Republic Slovenia Moldova Estonia Bosnia and Hercegovina Macedonia -2.0 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0
Sources: Economist Intelligence Unit estimates; national sources.
-15.0
-10.0
-5.0
0.0
5.0
10.0
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Country snapshot
Basic data
Land area Population Main towns 238,391 sq km; 12th-largest in Europe 21,5286,27 (May 28th 2008) Population in '000 (July 1st 2006) Bucharest (capital) Iasi Constanta Cluj-Napoca Climate Weather in Bucharest (altitude 92 metres) Continental Hottest month, July, 16-30C (average daily minimum and maximum); coldest month, January, minus 7-1C; driest month, February, 33 mm average rainfall; wettest month, June, 89 mm average rainfall Romanian Metric system Leu = 100 bani; the plural of leu is lei. Average exchange rates in 2010: Lei3.18:US$1; Lei4.21:1 Calendar year Two hours ahead of GMT January 1st-2nd, January 6th, Easter December 1st, December 25th-26th (Orthodox calendar), May 1st, 1,931 317 306 306 Timisoara Craiova Galati Brasov 304 301 297 281
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Political structure
Official name Legal system National legislature Romania Parliamentary republic; a new constitution was adopted in 1991 and 2003 Bicameral parliament composed of the Senate (137 seats) and the Chamber of Deputies (334 seats). Both chambers are directly elected from 41 multimember constituencies, comprising 40 counties and the municipality of Bucharest Universal direct suffrage over the age of 18 November 30th 2008 (legislative); November 26th and December 6th 2009 (presidential). The next parliamentary election is scheduled for late 2012 and the next presidential election is scheduled for late 2014 President, currently Traian Basescu Cabinet, headed by the prime minister, nominated by the president. The government is a coalition of the Democratic Liberal Party (DLP) and the Hungarian Union of Democrats in Romania (HUDR), supported by independent and ethnic minority representatives Christian Democrat-New Generation Party (CD-PNG); Conservative Party (CP); Greater Romania Party (GRP); National Liberal Party (NLP); National Union for the Progress of Romania (UNPR); Social Democratic Party (SDP) Prime minister Deputy prime minister Key ministers Agriculture, forests & rural development Communications & information technology Culture Defence Economy Education & research Environment & water management Finance Foreign affairs Health Interior & administration Justice Labour, social protection & the family Tourism & regional development Transport & infrastructure Lower house Upper house Mugur Isarescu Emil Boc (DLP) Marko Bela (HUDR) Valeriu Tabara (DLP) Gabriel Sandu (DLP) Kelemen Hunor (HUDR) Gabriel Oprea (independent) Ion Ariton (DLP) Daniel Funeriu (DLP) Laszlo Borbely (HUDR) Gheorghe Ialomitianu (DLP) Teodor Baconschi (DLP) Attila Cseke (HUDR) Constantin Traian Igas (DLP) Catalin Predoiu (independent) Ioan-Nelu Botis (DLP) Elena Udrea (DLP) Anca Boagiu (DLP) Roberta Anastase (DLP) Mircea Geoana (SDP)
Opposition parties
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