The Week in Review 3 – 9.08.2015

A roundup of the week's main stories

Roxana Vasile, 08.08.2015, 14:54

Severe drought in Romania

The drought in Romania has already compromised more than a quarter
of this year’s crops, which amounts to almost 2 billion euros worth of damage-
say the farmers’ representatives. They have called for the authorities’
assistance to be able to continue their activity but for the moment they have
only received promises related to aid for small crops. For large-scale
exploitations the Agriculture Ministry has to draft ampler funding schemes, for
which they need the approval of the European Union. The region of Moldavia (in
the east) is one of the most affected. Other areas severely affected by the
drought are a larger zone in Dobrogea (in the southeast) as well as the
southwest and northwest of the country. In another development, the prolonged
drought has caused the Danube river flow to drop at alarming levels, which
makes river traffic difficult in certain areas. According to experts, the
situation of the Danube river flow will remain the same in the coming days.

The National
Agency for Fiscal Administration (ANAF) reports a good rate of tax collection

Early this week the National Agency for Fiscal Administration- ANAF
reported a good rate of tax collection for the first half of 2015. In July,
ANAF managed to collect for the state budget further money worth almost 20
billion lei, the equivalent of almost 4.5 billion euros, 7.2% more than in the
same period of last year. All in all, in the first 7 months of 2015 the Fiscal
Authority collected over 9 billion lei, that is 2 billion euros, which is more
than in the same period of 2014. The revenues gathered from the VAT collection
rose, even in the context of a reduced VAT for foodstuffs from 24% to 9%. Good
results have been reported despite the effects of revenue contraction, given
the implementation of such fiscal measures as the 5% drop in the health
insurance contributions or the exemption from taxation of reinvested profit.
ANAF is determined to continue its fiscal anti-fraud offensive, proof thereof
being the decision announced at the end of this week, to verify all the
individuals who cannot justify their assets. Targeted are the owners of real
estate, luxury cars or substantial sums of money deposited in bank accounts in
Romania and abroad.

Disputes over
the new Fiscal Code in Romania

The governor of
the National Bank of Romania, Mugur Isarescu, on Thursday warned the
authorities once again on the economic imbalances that could be created by
further fiscal relaxation measures wanted by the government and included in a
new Fiscal Code. The government wants this new code to take effect as of the
beginning of 2016. The national bank governor said that for a sustainable
economic growth, problems related to productivity and jobs should first be
solved. Mugur Isarescu’s declarations were strengthened by the head of the IMF
mission to Romania, Andrea Schächter and the IMF resident representative Guillermo
Tolosa who recommended to the Romanian authorities to be moderate in applying
the fiscal relaxation measures provided for in the new Fiscal Code and to
revise the expenditure plan. In their view, these conditions are a must for
Romania to be able to reduce its public debt and relax its fiscal burden. The
new Fiscal Code was not approved by the Romanian president, Klaus Iohannis, who
sent it back to Parliament for reexamination. An extraordinary session was
convened for this purpose at the end of August.

Lukoil under
the scrutiny of Romanian justice

The Romanian branch of oil giant Lukoil has
concluded several deals with offshore companies controlled by people facing
various charges in the European Union – say the investigators of the case
involving several officials of Petrotel Ploiesti in central Romania and its
majority shareholder, the Dutch company Lukoil Europe Holding. Prosecutors from
Ploiesti said that Lukoil was buying crude oil from Kazakhstan by means of
several EU-based companies at higher prices selling the products at lower
prices than the raw materials and processing costs to other companies within
the group. That caused significant damage to the Ploiesti-based company. In the
period 2003-2014 the difference between external payments made by Petrotel
Ploiesti and the revenues obtained was of more than 4 billion euros.

A new US ambassador in Bucharest

The US Senate on Thursday confirmed diplomat Hans Klemm for the
position of ambassador to Romania. Hans Klemm, 57, was the US ambassador in East Timor and senior
coordinator for rule of law and law enforcement at the American embassy in
Kabul. The US official has pledged to consolidate the relations between the two
countries and support anti-graft fight in Romania. According to him, Romania is
a friend and a strategic partner of the United States, and Romania is not
vulnerable to Russia’s pressures in terms of energy supplies. The previous US
ambassador to Romania was Mark Gitenstein, whose mandate ended in December
2012.

Romanian
footballers in European competitions

Romania will have two teams in the Europa League’s
play-offs. After a one-all draw on home turf, Romania’s champions Steaua were
kicked out of the qualifying play-offs of the Champions’ League by Partizan
Belgrade, which thrashed the Romanians four-two on Wednesday. Steaua will now
be playing in the Europa League, where another Romanian side, Astra Giurgiu has
qualified. On Thursday the footballers from Astra secured a two-one home win
against English side West Ham United. The match in London ended in a two-all
draw.