The World Bank Office, Romania
ROMANIA WEEKLY UPDATE
Wednesday January 19 , 2004
The material published in this newsletter is compiled by the World Bank's Bucharest office and staff in Washington, and on the basis of publicly available information. It does not
represent the opinion of the World Bank or any other official body. No responsibility for factual accuracy can be taken
October balance of payments and NBR reserves
Romania's current account deficit widened to EUR
2,108 mn in the first ten months of 2003, up by 74.2%
over the same period of 2002. The trade deficit (goods
only, in fob terms) went up by 35.7%, to EUR
2,965mn. On the financing side, FDI went up 23.2%
in 10m of 2003.
10m
10m
y/y %
2002
2003
change
Current Account, (net,
-1210 -2108
74.2
in mn Euros) , o.w:
1
GNFS
-2115 -2939
39.0
Goods
-2184 -2965
35.7
Income
-466
-514
10.3
Current transfers
1371
1345
-1.9
Capital & Financial
1507
2365
Account, ow:
Foreign direct
880
1084
23.2
investment (FDI)
Net errors and
-297
-257
omissions
1) Goods and Non Financial Services
Medium- and long-term external debt stood at EUR
15,542mn at end-October 2003. Public and publicly
guaranteed external debt represented 64.2% (up from
62.8% at end-2002). At end-December 2003, foreign
exchange reserves of the National Bank stood at EUR
6,399.3mn, down by EUR 228mn over the previous
month. In terms of months of GNFS imports, the
liquid foreign reserves slightly dropped to 3.5, down
from 3.7 at the end of November and 3.6 at the end of
last year, according to public sources.
Additional information can be found at www.bnro.ro
2003 FDI estimates
ARIS, the Romanian Foreign Investment Agency,
estimates that FDI might have increased by 30-40% in
2003 to reach US$ 1.5bn, or 2.6% of the 2003
projected GDP . The optimism of ARIS relies on the
data reported at end Oct-2003, which indicate a 23.2%
increase of FDI y/y in Euro terms. The ARIS
projection does not included the BCR privatization
proceeds (estimated at US$ 222mn) which would be
received in January 2004, after the signing of the
privatization documents with IFC and EBRD, nor the
proceeds to be yielded by the energy sector
privatization deals, which are estimated at some US$
0.5bn for Petrom and a similar amount for the
electricity and natural gas retailers.
Privatization proceeds worth US$ 300mn in 2003
In 2003, the Authority for Privatization and
Management of State Shareholdings (APAPS) signed
sale-purchase contracts for 309 companies, with a
combined share capital worth some 14,000 bn ROL
(US$ 300mn). Out of the privatized companies, 51
were large and very large, with a precarious financial
and economic situation, and 258 were small and
medium-sized companies.
NBR adjusts the currency basket
The National Bank of Romania (NBR) has decided to
raise the weight of the Euro in the currency basket
used to monitor the ROL depreciation from 60% to
75%, to better reflect the country's foreign trade
orientation toward the EU.
Privatization of Petrom, Distrigaz, Electrica
Banat and Electrica Dobrogea might be
delayed
The deadlines for the privatization of Petrom oil
company and the two natural gas retailers, Distrigaz
Sud and Distrigaz Nord, might be slightly delayed,
according to the Romanian media, primarily due to
unclear ownership rights over some of the assets of the
companies, uncovered in the process of due diligence.
* Letters of interest for Distrigaz Sud and Distrigaz
Nord, the natural gas distributors, have been submitted
by Gazprom of Russia, Gaz de France, Ruhrgas of
Germany, Enel of Italy and Wintershall of Germany. *
A slippage of the deadline was also indicated for the
privatization of electricity distributors Electrica Banat
and Electrica Dobrogea, initially planned to be sold by
the end of last year.
November nominal and real wage earnings
In November 2003 the net monthly average wage
earnings (all economy) stood at ROL 5,037,861 (or
Euro 126), up 1.6% m/m. See attached the dynamics
of the y/y real growth of the net wage earnings.
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Real wage index (CPI
deflated)
y/y % change
8.4
8.1
8.0
9.2
7.9
9.0
Note: The data for October in our previous
Newsletter have been corrected from 9.1% to
7.9%, according to NIS data.
The reference interest rate of the National
Bank
The reference rate of the
National Bank of Romania
will be 21.25 percent per
year in January 2004.
(Please see attached the
evolution of the reference
rate over the previous 4 months.) The yield paid by the
Treasury for latest 12m Tbills issue stood at 17.9% at
the end of December.
Jan-04
Dec-03
Nov-03
Oct-03
Sep-03
21.25
20.41
20.19
19.25
19.11
2003 yearend inflation
The preliminary monthly inflation for December 2003
was announced at 1.2%, bringing the yearend CPI
inflation at some 14.1%, exceeding only marginally
the 14% official target. For 2004 the central bank
announced a 9% target for the yearend inflation.