RSM Romania_Business Brief_22-26.08.2016

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THE BUSINESS WEEK IN ROMANIA
22 – 26 August 2016

MACRO
• Budget policy sacrifices investments
Seven months into the year, investment spending is
only half what was planned. If investments had gone
as planned, the deficit would be three per cent of G.D.P.
The budget deficit of 0.2% of G.D.P. (1.7 billion lei) is
the sole cause of the strangulation of spending on
investments, due in large part to a collapse in receipts of
E.U. funding. The 2016 budget forecasts non-returnable
funds of thirteen billion lei, but so far only
1.3 billion lei has been received from the E.U., a tenth of
the total. The government aims to spend 37.7 billion lei
on investments this year, but has spent only 12.8 billion
so far.
Ministry of Finance borrows 75 million lei from
the banks
The Ministry of Public Finance has borrowed seventyfive
million lei from the banks, in addition to the auction
last Thursday, when it attracted 646.3 million lei from
the issue of seven-and-a-half-year bonds at an
average yield of 2.63% per annum. The sums will go to
refinance public debt and the state budget deficit.
• The National Bank’s reserves would have no value
if they were kept in Romania
Romania keeps its international reserve abroad
because it would have “absolutely no value” if it
were kept in Romania, explained Mugur Isărescu, the
Governor of the National Bank at a press conference
held in Alba Iulia. “Because very many people believe
that there is something fishy going on if the National
Bank keeps its gold in London. Well, gold is part of our
international reserve. It is the international reserve.
It is not the internal reserve. The whole international
reserve of a country is kept abroad, and that is why it
is called the international reserve. Dollars, thirty-two
billion of them, thirty-seven billion in the equivalent of
dollars—we do not keep them here in Romania. If we
kept them in Romania, they would have absolutely no
value. They would not ensure stability. We keep them
in accounts abroad. That is the way to keep them. It
seems counter-intuitive, but if we kept the foreign
currency reserve in Romania, in the first place we would
be lending for free, without interest, to the countries
who issue the currencies in question, and in the second
place, we would not ensure convertibility,” declared
Mugur Isărescu.
• Romania wants guarantee fund for investments
in Chișinău
Romania is prepared to create a guarantee fund for
investments in Chișinău, according to Dacian Cioloș,
speaking after a meeting with his Moldovan counterpart
Pavel Filip. Cioloș said that it was important to stimulate
Romanian investments in the Republic of Moldova and
that a major Romanian bank is willing to do so.
Sources: Agerpres, Economica.net, Profit.ro, News.ro,
Bursa, Mediafax, Ziarul Financiar
BUSINESS
Nine-million-Euro injection of capital in insurance
Two insurance companies, AXA and Gothaer, received
a nine-million-Euro injection of capital last month. AXA
investors stumped up the lion’s share of the cash: 5.3
million Euros. AXA was recently bought by the Vienna
Insurance Group. AXA is now worth more than 95
million lei (twenty million Euros). Gothaer’s German
shareholders came up with 3.3 million Euros in capital in
July, making the company worth more than 53 million lei
(twelve million Euros). Gothaer has a turnover of around
eighty-two million lei in Romania and around eighty
thousand clients.
• C.E.C. continues financing agriculture in partnership
with A.P.I.A.
C.E.C. Bank has announced it will be continuing its
partnership with the Agricultural Payments and
Intervention Agency (A.P.I.A.) on the following
support schemes: Single Payment by Surface Area,
Redistribution Payment, Greening Payment, and
Compensatory Measures for Rural Development
Applicable to Agricultural Land. Beneficiaries will be
able to access up to ninety per cent of the value of the
sum calculated according to the certificate issued by
A.P.I.A., if this is less than twenty per cent of turnover
or revenues. The bank states that interest will be 3.51
per cent per annum. Commission is 0.95 per cent of the
value of the loan.
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BUSINESS
• Investments of thirty million Euros
Gold Plast, the producer of top-quality disposable
plates, has made an investment of thirty million
Euros in its Topoloveni factory, which was established
in 2006, with a workforce of thirty-five and now
employs six hundred and twenty-five. The Topoloveni
factory is the Gold Plast Group’s centre of excellence,
where it produces all the equipment it needs in order
to manufacture three thousand types of item, with
an output of eight hundred million units per annum,
retailed in thirty-nine countries.
• Poșta Română struggling but has potential
Poșta Română, owned by the Ministry of
Communications, has the capacity to become
Romania’s largest postal and courier services provider,
thanks to its network and the fact that it can reach
places private companies cannot. However, the
company has a difficult financial situation, with total
debts of 645.6 million lei at the end of 2015. Poșta
Română has taken out a three-year loan of sixty million
lei from state bank Eximbank to finance its working
capital, after recording losses of thirty-three million lei
last year, against a backdrop of a four per cent decrease
in business. In the first half of this year Poșta Română
recorded a net profit of 15.8 million lei, 2.5% up on the
same period of 2015. Romania’s courier market is worth
350 million Euros and the market leader is Fan Courier.
• B.C.R. has sold three tonnes of gold in the last eight
years
The Romanian Commercial Bank (B.C.R.) has sold three
tonnes of gold in the eight years that have elapsed
since gold began to be distributed through the banks.
The quantity sold is worth 504 million lei (113 million
Euros) at the price of 168.1 lei per gram, the latest price
quoted by the National Bank. Gold sales increased in
2016 against the backdrop of risky financial markets
and small or partly negative yields on state bonds on
developed European markets. Sixty per cent of gold
purchasers are men aged between thirty and fifty. The
B.C.R.’s most popular gold products are coins and tengram
ingots. A ten-gram ingot will set you back 1,934
lei, while a kilogram will cost you 185,512 lei.
• Raiffeisen Bank takes Romania to court
Because of the commissioning payments law, Raiffeisen
Bank is to take legal action against Romania at the
International Centre for Settlement of Investment
Disputes, the World Bank’s court. The Ministry of
Public Finance has confirmed that it has received a
letter of notification from Raiffeisen Bank International.
The Ministry will consult with the initiator of the
commissioning payments law, deputy Daniel Zamfir, and
lawyer Gheorghe Piperea, as well as with the National
Bank of Romania. The ministry will also study the answer
that the Constitutional Court is due to provide with regard
to the bank’s citing of the unconstitutionality of the law.
• Commissioning payments law has not led to a collapse in
the banking industry
Three months after the commissioning payments law
came into effect, less than two per cent of borrowers
have expressed an intention to give up their homes to pay
off their mortgages. Some banks have tightened lending
requirements and substantially increased both interest
and down payments. The result has been that some
customers have hurried to take buy homes as quickly as
possible, while others have decided to wait, wagering that
prices will fall as a side effect of the new law.
• Diverta opens new shop in Promenada Mall
Diverta has opened a new shop in the Promenada Mall.
The shop covers one hundred and seventy metres and by
November will expand to incorporate an adjacent onehundred-square-metre
space. Founded in 1999, Diverta,
which sells books, games, gadgets, and stationary, has
six shops in Bucharest and twenty-five shops around
Romania. The company distributes thirty thousand
book titles.
Sources: Capital, Curierul Național, Profit.ro, Agerpress,
Bursa, Ziarul Financiar, Adevărul
•
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