Press review (Sept 30)

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The Romanian dailies on Wednesday give main coverage to the sparring between the two ruling partners that President Traian Basescu tried to mediate, the influence that such squabbling has on the national economy and the National Bank of Romania’s decision to cut the key rate and to raise the local taxes from the beginning of next year.

Traian Basescu distances himself from the political parties’ bickering in an Olympian manner, the Evenimentul zilei writes. Careful that no stain from the dirt produced by the ruling Democratic Liberals (PD-L) and Social Democrats (PSD) over the last 24 hours should tinge his candidacy for re-election, Basescu is re-positioning himself.

The blame for this political crisis – an artificial one, that the citizens find hard to understand – was put on the two ruling partners, although it is hard to believe the president did not know of Prime Minister Emil Boc’s plans to sack Administration and Interior Minister Dan Nica, the daily writes.

The mixed government of politicians and technocrats that was established in neighbouring Hungary following a major political crisis has initiated radical reforms, such as the restructuring of the public sector. A similar crisis in Romania looks set to pave Basescu’s way to a second term, the Evenimentul zilei says.

The Social Democrats, though taken by surprise by each move of the Democratic Liberals, stand firm and say the only solution they agree to is to keep Nica as Interior Minister. At the same time, PSD leader Mircea Geoana announces that a major electoral fraud is being prepared, the Ziua writes.

Other headlines carried by the Bucharest-based papers on this topic: ‘Basescu did not sign Nica’s removal’ (Jurnalul National); ‘Eternal check to the PSD’ (Ziua); ‘Basescu engages the PSD in conversation until the PD-L takes hold of the entire Victoria Palace (the govt’s hqs)’ (Gandul); ‘Basescu wins the second round of the political crisis: Keep on negotiating, fellows!’ (Cotidianul); ‘Utter shame – Basescu, Geoana and Boc prolong the political agony’ (Gardianul); ‘Geoana is caught in the middle between the PD-L and the president’ (Romania libera).

The national economy’s response to the recent political show has been rather confused, the Gandul says. While economists say Romania will take more expensive loans from the outside due to the political bickering, the Stock Exchange and the national currency leu have kept on growing. However, the dealers suspect a fresh intervention of the Romanian National Bank as far as the leu is concerned.

The political tension could make Romania contract more expensive loans in order to pay the pensions and wages. The finances ministry announced it would start a road-show in about a week to unveil a eurobond issue worth at least 500 million euros and no more than 1.5 billion euros. The money will be converted into lei afterwards and it will be used to pay such state dues as the pensions and the public wages, the Gandul adds.

The budget airlines have managed to survive the downturn by cutting the tariffs, by promotional fare and by introducing flights to new destinations.

While the big operators are making decisions to curb activities in order to cope with the economic crisis, the domestic budget airline operators have managed to record growth.
‘This year, the low-cost sector will post 20-25 percent growth, with just 10 percent growth being anticipated for 2010. At this moment, the low-cost market is worth some 160 million euros in domestic flights alone’, the Jurnalul National quotes Blue Air company managing director Adrian Ionascu as saying.

In a frantic search for financial resources, the Tax Revenue Authority is trying to recoup the money the state should have taken from the housing VAT during 2006-2008. Concretely, it deals with the transactions conducted by individuals at a time when the Fiscal Code said that VAT should be paid for the transactions in new houses and land for building amounting to more than 35,000 euros.

The Romanian state should get three billion euros in such due VAT, but tax consultants say the chances to recoup the money are slim. Nevertheless, they believe the state will resort to foreclosure, the Ziua reports.

The National Bank of Romania’s Board of Directors, at its last money policy meeting of the current term, on Tuesday lowered the key rate by half a percentage point to 8 percent and kept the minimum compulsory reserve rates unchanged, as expected. The new key rate takes force on Wednesday, Sept. 30 and it is a February 2008 low. Since then, the central bank has raised the key rate up to a 10.25 percent peak in force over Aug. 2008 – Feb. 2009, the Romania libera reports.

The new levels of the taxable amounts, of the local taxes and fees and the fines applied starting the 2010 fiscal year have been published in the Official Journal. A lot of such taxes have been hiked 20 percent, while some other by more than 40 percent or even 50 percent, Wednesday’s print media reports.

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