RSM Romania_Business Brief_28.03-01.04.2016

THE POWER
OF BEING
UNDERSTOOD
AUDIT | TAX | CONSULTING
THE BUSINESS WEEK IN ROMANIA
28 March-1 April 2016

MACRO:
• “Macroeconomic balances do not justify an accord
with the IMF”
Romania’s economic situation, basic economics and
macroeconomic equilibrium do not warrant the signing
of a new accord with the International Monetary
Fund, declared Minister of Public Finances Anca Dragu
on Friday evening: “I believe that at the moment
Romania’s economic situation, basic economics and
macroeconomic equilibrium do not warrant the signing
of an accord with the IMF. In any event, a year ago,
the European Commission included Romania on its list
of countries with macroeconomic imbalances. On 24
February 2016, the Commission decided that Romania
no longer has any macroeconomic imbalances.
Therefore, there is no economic situation to justify
the need for an economic and financing agreement
with international financial institutions.” She also drew
attention to the rules of economic governance by
which Romania has to abide as a member state of the
European Union.
• The National Bank’s foreign currency reserves
increased by 500 million euros in March
The National Bank of Romania’s (BNR) foreign currency
reserves increased by almost 500 million euros in March
(1.48%), reaching 31.28 billion euros, after receipts of
around 1.39 billion euros, entered into the accounts of
the Ministry of Finance and the European Commission
in particular. As of 29 February the reserves stood at
30.825 billion euros. In March, there were receipts of
1.389 billion euros, partly from release of the minimum
foreign currency reserves set up by banks in the BNR
after these were reduced in January from 14% to 12%,
according to a BNR press release.
On the other hand, there were outlays of 932 million
euros, representing modification of the minimum
foreign currency reserves, payment of instalments and
interest on behalf of the public debt denominated in
foreign currency, and others.
The gold reserve remained steady at 103.7 tonnes,
valued at around 3.62 billion euros, given international
price fluctuations. Romania’s international reserves
(foreign currency plus gold) stood at 34.9 billion euros
at the end of March, compared with 34.6 billion euros
in February.
• Rate of unemployment at a six-year low
The number of people unemployed decreased in
February of this year by around 7,000, compared with
the previous month, reaching a figure of 597,000, and
the rate of unemployment remained steady at 6.5%,
the lowest level since the middle of 2009. In January,
the number of unemployed in Romania fell by 12.000
to 604,000, according to the figures published on
Friday by the National Institute of Statistics. The level
of 6.5%, calculated using the methodology of the
International Office of Labour, had not been recorded
since May-June 2009. The estimated number of people
unemployed (aged 15 to 74) for February of this year
was 597,000, a decrease from the figure of 604,000 for
the preceding month and also compared with the figure
of 626,000 for the same month of the previous year.
Unemployment is higher among men, at 7% in February,
compared with the figure for women, at 5,8%.
• The first concrete measure to reduce bureaucracy
The government has passed an emergency ordinance
that will massively reduce the number of documents
that public institutions of every kind will be able to
demand from taxpayers, according to sources in the
Victoria Palace, cited by Hotnews. The legislation,
inspired by a recent proposal, has a single article:
“Every public entity in Romania at the central and local
administrative level, every agency or other institution
with public authority, will not be able to demand from
taxpayers—natural persons, legal entities or nongovernmental
organisations—any document that
has been generated or already exists in any kind of
archive of any kind of public entity. The public entity
that demands any such document is obligated to take
measures to obtain such document directly, without
demanding this from the taxpayers.” The passing of
this emergency ordinance is the first concrete measure
put forward by the so-called “paperwork-cutting
commission”, whose establishment was recently
announced by the Cioloș government.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING

MACRO:
• Juridical Commission report on the commissioning
payment law expected on Tuesday, 5 April
The Juridical Commission has decided that the report on
the commissioning payment law should be made public
on Tuesday, 5 April, the decision having been taken
after more than three and a half hours of discussions,
in which the law’s initiators pleaded for sharing the
risk between banks and consumers, while the National
Bank of Romania emphasised the dangers of the law.
The Juridical Commission will reconvene on Tuesday,
5 April to draw up the report on the commissioning
payment law, which will then be passed to the Chamber
of Deputies. In the session on Tuesday, the deputies
will decide whether they will increase the ceiling from
150,000 to 250,000 euros and whether they will
eliminate the First Home programme from the proposed
law, as demanded by the National Bank. The president
of the Juridical Commission, Bogdan Ciucă, asked
participants in the debate to come up with concrete
viewpoints, with eventual amendments to be put to
a vote by the Juridical Commission if adopted by
the deputies.
Sources: adevarulfinanciar.ro, Hotnews, news.ro,
profit.ro, zf.ro
BUSINESS
The State will list another five large companies on the
stock exchange
The head of the capital markets supervisory
committee, Mircea Ursache, declared in an interview
for economica.net: “There is a prospect that within
one and a half years the State will extend with
the same success as hitherto the listing of major
Romanian companies: Hydroelectrica, Salrom, the Port
of Constanța, and the National Airports Company.
Mircea Ursache, vice-president of the Financial
Supervisory Authority (ASF), who is in charge of capital
markets, stated: “One of the five major successes
of the Romanian capital market will be these four
major listings by no later than 2017, which will mean a
very great deal for the Romanian capital market, will
contribute to an increase of liquidity in this market, and
will bring numerous foreign investment institutions
onto the Romanian market.” The four listings (IPOs)
are Hydroelectrica in November 2016, followed by the
National Salt Company, the Port of Constanța, and the
National Airports Company, in that order.
• UniCredit Bank Romania goes from stable to negative
The Fitch rating agency has downgraded UniCredit
Bank Romania from “stable” to “negative”. The decision
was taken as a result of the downgrading of the parent
group in Italy to negative and because Romanian
operations are of strategic importance for the Italian
group. UniCredit Bank reported a net profit of 222
million lei last year (50 million euros), an increase of
177% compared with 2014, against a backdrop of a
decrease in provisions costs of around a third, to 407
million lei. UniCredit is one of the most important banks
in the local banking system, with a market share of
around eight per cent and occupies fourth place in the
league tables by assets.
• The number of liquidated companies doubled in the
first two months of the year. Companies going out of
business doubled by 52%
The number of companies that went out of business in
the first two months of this year increased by 51.89%,
and the number of companies that were liquidated
increased by 111.77%, compared with the same period of
the previous year, according to data from the National
Office of the Registry of Commerce (ONRC). Bucharest
came in first place for the number of companies going
out of business, at 654, an increase of 64.34%, followed
by Constanța, at 250 (+68.92%) and Bihor, at 207
(+71.07%), according to ONRC data. Likewise, 6,603
companies were liquidated in January and February,
111.77% more than in the same period of 2015. The
number of companies going into insolvency fell in the
first two months of the year by 23.43% compared with
the same period of the previous year, decreasing to
1,451 units. The greatest number of cases was in the
Municipality of Bucharest, at 320, a decrease of 22.14%,
followed by Jassy, at 103, a decrease of 0.96%, and
Bihor, at 96, a decrease of 2%. The economic sector
hardest hit was retail and wholesale, motor vehicle and
motorcycle repairs, with 466 cases, 28% less than in
January and February 2015.
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING

BUSINESS
• Rompetrol moves ever closer to becoming Chinese
The Kazakhs and Chinese are coming closer and
closer to reaching an agreement on what might be the
transaction of 2016, with Romania’s biggest refinery
at stake: Petromidia, the only refinery with a strategic
position on the Black Sea. According to the information
available, the value of the transaction could exceed five
hundred million dollars. “For some time the information
has been that the two parties are on the final stretch
as regards an agreement. The managers here have had
repeated talks with the Chinese party, and so there
are signs,” said market sources. “There are few doubts
as to the transaction taking place, especially given
Kazakhstan’s situation, but it remains to be seen when
a final agreement will be reached between the two
parties,” added sources in the field.
• Investments in oil and gas exploration and production
triple within the Romanian economy
A one-billion-euro average investment in oil and natural
gas exploration and production generates an additional
2.3 billion euros for the Romanian economy, through
direct added value and the activities of companies
in the sector, and also thanks to the fact that their
efficiency has vertically and horizontally engaged
a large number of suppliers and business partners,
indicates a study carried out by consultancy firm KPMG
at the request of petroleum association ROPEPCA.
The investment of one billion euro also has a knockon
effect on the rest of the economy, with additional
gains of 0.9 billion euros, which raises to 3.2 billion euros
the total impact that the oil and gas exploration and
production industry has on GDP. The one-billion-euro
investment taken as a sample in the study maintains
almost 26,000 direct jobs in the sector. An additional
20,000 jobs are created or maintained in other sectors
of the Romanian economy. KPMG set the estimated
total impact at 45,900 jobs linked directly and indirectly
to the industry.
Sources: adevarulfinanciar.ro, Capital, economica.net,
Hotnews, Mediafax.ro, profit,ro, ZF.ro
THE POWER OF BEING UNDERSTOOD
AUDIT | TAX | CONSULTING