Mariana Gheorghe, President of the Foreign Investors Council: " Increasing the VAT to 24% will have a negative impact on the economy ''
" Increasing the VAT to 24% will have a negative impact on the economy, '' stated Mariana Gheorghe, President of the Foreign Investors Council. Gheorghe added that this decision will discourage investment. The representatives of foreign investors think that the Government should implement measures that would increase the efficiency of the public sector and to stimulate investment in order to compensate the negative effects of the higher VAT.
The consolidated sales of BASF in Romania have dropped 61% over the course of last year, reaching EUR 254 million, compared to EUR 648 million in 2008, mainly because of the contraction of the gas trading market, and accounted for 13% of the group's European sales. BASF is the leading provider of paint and plastic items for the Logan car, made by Renault at Dacia Pitesti, and does not expect a drop in sales to the automotive industry. (Romanian source)
Prefab Bucharest became the first private company to be listed in the first class of the Bucharest Stock Exchange in the past five years
Prefab Bucharest, a producer of auto-claved concrete and prefabricated construction elements, became today the first private company to be listed in the first class of the Bucharest Stock Exchange in the past five years. Businessman Marian Milut, the majority shareholder of Prefab, said that some of the company's divisions operate close to 100% output. (Romanian source)
Transferoviar Grup Cluj-Napoca to borrow EUR 1.87 million from UniCredit Tiriac
Freight railroad operator Transferoviar Grup Cluj-Napoca, which is owned by businessman Calin Mitica, will borrow EUR 1.87 million from UniCredit Tiriac Bank. The money will be used to buy new train engines and will be paid back in 10 years. (Romanian source)
P&G wants to translate the export model used by Dacia and Nokia to the consumer goods industry
The P&G factory in Urlati, Prahova county, wants to translate the export model used by Dacia and Nokia to the consumer goods industry and might reach sales worth EUR 500 million on the medium-term, considering that the unit will be supplying 20 foreign markets. Relying on export the Nokia plant in Jucu has reached in less than 3 years a turnover worth over 1 billion euros in Romania. The value of exports grew from 177.4 million euros in 2007 to 597.5 million euros in 2008. (Romanian source)
MedLife's acquisition of 80% of PDR Brasov had caught the eye of eight investors
The transaction through which MedLife, one of the leading private providers of healthcare services in Romania, bought 80% of Policlinica de Diagnostic Rapid (PDR) Brasov had caught the eye of eight investors, both strategic and financial. The transaction, the latest on the private healthcare services sector, is consolidating MedLife's position as top earner of the industry, with a turnover of EUR 26 million last year. The private healthcare services market has recently been targeted by investment funds, which bought MedLife and Centrul Medical Unirea for more than EUR 50 million. (Romanian source)
NBR announced yesterday that the annual inflation will reach 8% until t
The NBR announced yesterday that the annual inflation will reach 8% until the end of 2010 due to the 5% VAT increase. The estimate for the price change has already been communicated to the IMF as it is a criterion to be fulfilled in the financing agreement. However, NBR Governor Mugur Isarescu said the inflation target has not been changed yet but its level is still being calculated. The final projection will be announced in early August when the quarterly inflation report is posted. Also, the head of the Central Bank said that up until now the VAT increase has not been fully reflected by the prices mainly due to the demand deficit on the Romanian market. Also, the IMF Board approved the revising of the inflation target for 2010 set in the stand-by agreement signed with Romania from 3.5% at 7.9% after the VAT increase at 24%. (Romanian source)
NBR pointed out that foreign currency lending should be slowed down
The NBR pointed out that foreign currency lending should be slowed down while the volatility of the RON/EUR exchange rate won't rule out future problems for the foreign currency denominated loans. Cristian Popa, the NBR Vice-Governor, said: " We are facing a series of problems such as more acute asymmetries between the financial institutions and more intense processes of currency denomination ''. Popa added that according to the NBR data, the NBFIs had a debt cap 40% above the available limits. (Romanian source)
The net average salary in May was of 1,428 RON, a 0.6% drop from April
According to the National Institute for Statistics the net average salary in May was of 1,428 RON, a 0.6% drop from April, but 5.3% higher than in the same month of 2009. The most significant drops have been recorded in the telecom field, 13.8% and in activities auxiliary to financial brokering. (Romanian source)
Romania's economy will drop 3% this year, the ING Bank analysts believe. They have revised the initial estimate which pointed to a 1.4% contraction, the main reason for the decline being the decision to decrease the salaries of public employees and the VAT increase. Moreover, next year the people won't see the economy improve. " We had to change the moderately optimistic expectations regarding Romania to show a 3% GDP contraction this year due to the implementation of salary cuts in the public sector as of July 1 and the VAT increase at 24%. These measures will severely affect consumption in 2010 and the following year '' writes an ING Bank analysis. The ING officials expect the economic growth to be resumed in 2012 (+2.9%) while they estimate a 2.2% economic contraction for 2011. The Coface analysts see a 1.5%-2% economic decline this year due to the austerity measures announced by the Government. Although limited by the future interventions of the Central Bank, the VAT increase will continue to put pressure on the national currency which remains very vulnerable. (Romanian source)
The Ministry of Finance borrowed merely RON 265.8 million from the sale of 6-month T-bill sale compared to RON 750 million it had predicted. The yield was 6.99%, the highest in five months. In the previous 6-month T-bill sale, the ministry got an average yield of 6.74% per year. (Romanian source)
Retail turnover down 5.9% in the first five months of the year
The turnover of the retail sector, except for car and motorbike sales, dropped in the first five months of the year, both the gross volume and the volume adjusted for the number of working days and seasons, by 5.9 and 6.7% respectively. The retail turnover fell 6.7% because of the drop in sales of food products, beverages and tobacco by 8.3% and in sales of non-food products by 7.7%. (Romanian source)
Former football player Gica Popescu plans to build a bazaar-type shopping center near Rahova square in Bucharest
Former football player Gica Popescu plans to build a bazaar-type shopping center near Rahova square in Bucharest, which will represent an investment of around EUR 10 million. " Almost all my projects are made with financing from banks. The problem is that banks, who brag about the fact that they are still giving out loans, aren't '', said Gica Popescu, adding that the only bank that offered him a credit facility was Garanti Bank. (Romanian source)
The Romanian Government could team up with ArcelorMittal to build a new gas-fired power plant in Galati should CEZ pull out of the project
The Romanian Government could team up with ArcelorMittal to build a new gas-fired power plant in Galati should CEZ, the company which had signed an MOU with Termoelectrica, decide to pull out of the project, according o Adriean Videanu, Minister of Economy. CEZ was given until September to decide whether it wants to be part of the EUR 400 million project or not. (Romanian source)
Covalact wants to invest EUR 1.3 million in product quality, in its portfolio and in the increase of the production and logistic capacities
Covalact budgeted a 10% turnover increase for this year after having seen revenues of EUR 25 million. The company wants to invest EUR 1.3 million in product quality, in its portfolio and in the increase of the production and logistic capacities. The company has already invested EUR 1.5 million in these segments in the past two years. (Romanian source)
Banks are obliged by the state to transfer 16% tax from customer deposit interests to the state
Banks are obliged by the state to transfer 16% tax from customer deposit interests to the state. Banks impose 16% on incomes from interests of natural persons, regardless to the account opening date, and not only those obtained after July 1, as the Ministry of Finance said the new amendments to the Fiscal Code must be interpreted as such. At the end of May, customer deposits totaled RON 168 billion, of which RON 100 billion were held by households, according to data from the National Bank of Romania. (Romanian source)
The Ministry of Economy could be restructured and its foreign trade division could be put under the control of the Ministry of Foreign Affairs, according to Adriean Videanu, the Minister of Economy. The final decision will be taken tomorrow by the Cabinet. (Romanian source)
Adrian Nastase denied rumors of a meeting between PSD and PNL representatives
Adrian Nastase, President of the National Council of the Social-Democrat Party (PSD), denied yesterday rumors about an alleged meeting with representatives of the National Liberal Party (PNL) in order to discuss a possible government strategy. Nastase admitted that the PSD and PNL are discussing an open letter to foreign ambassadors to Bucharest. (Romanian source)
Sulfina Barbu, PD-L: The authorities did not discuss a new agreement with the IMF
Sulfina Barbu, a PD-L Deputy, stated yesterday, July 5, after the meeting of the party's leaders, that authorities have not discussed so far a new agreement with the IMF. Barbu added that the IMF's decision to release the fifth installment was based on the Government's determination and appealed to opposition parties to show responsibility and to refrain from derailing the agreement. (Romanian source)
