July 29 – Augst 4

A review of the most important events in Romania this past week.

Mihai Pelin, 03.08.2013, 13:59

In the line up:

Romania’s President Traian Basescu summons the Higher Defense Council
Romania to sign a new precautionary agreement with the IMF and the European Commission
The Romanian Government makes the first budget adjustment this year
A heat wave affects southern Romania
Several Romanian football teams played in the Europa League and the Champions League
“Child’s Pose” is Romania’s entry at the Oscars next year

Romania’s President Traian Basescu summons the Higher Defense Council

Romania’s President Traian Basescu on Friday summoned the Higher Defense Council to discuss the privatization of the Freight Division of the Romanian Railway Company, CFR Marfa, approved by the Government last week. In June, GFR, part of the Grampet Group, won the tender after offering to pay some 202 million euros for 51% of the shares in CFR Marfa. Also, GFR pledged to invest another 900 million lei, the equivalent of 204 million euros in the company and an additional 1.5 million euros in environmental protection. The Freight Division’s debts to the state budget have been erased as part of the privatisation process. On the Romanian freight transport market, the Freight Division of the Romanian Railway Corporation holds over 40%, while GFR has more than 30%. This is a 50-billion tons market whose value stands at 500 million euros.

Romania to sign a new precautionary agreement with the IMF and the European Commission

Romania has agreed on the terms of a new precautionary agreement with the international financial institutions. The new agreement, worth 4 billion euros, will cover a period of two years. Prime Minister Victor Ponta says the terms of the agreement will be presented to Parliament in September. He has added however that according to the new terms of the agreement, it is no longer compulsory for the Romanian authorities to privatize other state companies. He has also pointed out that the amount to be made available to Romania under the new agreement comes to confirm that the country’s credibility has improved, just like its crediting capacity. PM Ponta also underlines that the money will only be used in exceptional situations. According to the International Monetary Fund, Romania should focus on speeding up reforms, particularly in the energy and transport sectors and should strengthen the economic stability it has achieved so far. Going ahead with the reform of the healthcare system is another priority of the new economic program agreed upon with the international lenders. The new precautionary agreement is to be submitted to the IMF board for approval this autumn. This is the third agreement signed by Romania with the International Monetary Fund and the European Commission after the successful completion of two similar ones, signed in 2009 and 2011, respectively. The last one was completed in June 2013.

The Romanian Government makes the first budget adjustment this year

After getting the approval of its international lenders, the European Commission and the International Monetary Fund, the Romanian government has green lighted the first budget adjustment for 2013, against the positive revision of the economic growth rate from 1.6% to 2%. Therefore, the ministries of healthcare, regional development and justice and the National Anticorruption Directorate will receive supplementary funds while the budgets of the labour and transports ministries and of the Government’s General Secretariat will be severely cut. On Tuesday, the cabinet passed an ordinance under which the VAT for bread is reduced from 24% to 9%, as of September 1st. This could be an important step towards reducing tax evasion, says Prime Minister Victor Ponta, but producers need to cooperate in this respect. Fiscal pressure on the latter will drop, prompting the government to hope that lower taxes will encourage producers to pay their taxes to the state and thus increase the budget revenue collection rate. In order to compensate for the decrease in the VAT for bread, the government has approved an increase in excise duties for alcohol and introduced excises for luxury goods such as cars with high power engines, yachts, objects made of gold, watches and weapons. A new budget adjustment has already been approved for the end of October.

A heat wave affects southern Romania

A heat wave gripped southern Romania early this week. Thermal discomfort in this area was high, with thermometers reading 40 degrees Celsius and a temperature-moist index exceeding the critical threshold of 80 units. Tens of people were taken to hospital after having fainted in the street because of very high temperatures. Speed limits were set for trains circulating in the affected areas. The heat wave was followed by unstable weather throughout the country, with strong wind and torrential rain.

Several Romanian football teams played in the Europa League and the Champions League

Three Romanian football teams competed on Thursday in the Europa League third preliminary round. On home turf, the vice-champion Pandurii Targu Jiu and the Cup’s winner Petrolul Ploiesti took on the Israeli team Hapoel Tel Aviv and the Dutch Vitesse Arnhem, respectively. Both games ended 1-all. Astra Giurgiu won to the Slovak side Trencin 3-1 in an away match. Also in an away game, counting for the Champions League, Steaua Bucharest defeated the Georgian side Dinamo Tbilisi 2-nil. This victory considerably increased Steaua’s chances of making it to the competition’s play-off round.

“Child’s Pose” is Romania’s entry at the Oscars next year

“Child’s Pose”, directed by Calin Peter Netzer has been selected to represent Romania at the Oscars next year, in the best foreign film category. This feature film won several international awards among which a Golden Bear and a FIPRESCI at this year’s Berlin Film Festival. The film tells the story of a controlling mother’s relationship with her adult son. Calin Peter Netzer’s film is also a tale of corruption and guilt in modern Romania.