Romania started 2010 under the shadow of the International Monetary Fund (IMF), which, together with the European Commission and the World Bank, gave the country a EUR 20 billion loan in 2009 to weather its economic storm. Initially set out as a safety net loan, the money proved to be life saving. But, as with any loans, this came with a set of strict conditions and paved the way for another loan, expected for 2011 - continued-. Read the first part of this overview here.

By Corina Saceanu

Foreigners dig Dacia but country brand, not such a success

Despite a bleak period, there was some good news stemming from Romania. The country’s main exporters during this period were Automobile Dacia, Nokia, Rompetrol Rafinare, ArcelorMittal Galati and OMV Petrom.

Dacia, now owned by French Dacia-Renault, sold over 180,000 cars in the first half of the year, up 18 percent on the same period 2009. As local sales slowed, Dacia became one of the best Romanian exports, with 123,000 cars sold in Western Europe in the first part of the year.

Hoping to attract more tourists, Romania’s Tourism Ministry launched another branding campaign. It was not without buzz. The slogan, ‘Explore the Carpathian Garden’, came with a logo dispute as media found a similar one online, at a lower price than the one made by the THR-TNS consortium. The EUR 900,000 contract included research as well as the brand creation itself.

Local deals unlocked after cash freeze period

The local mergers and acquisitions segment, which had been suffering in the last two years as bank funding froze, had a slight comeback in 2010. The value of deals was perhaps smaller than previous  years, but at least some deals went through:

*Local investor Dinu Patriciu bought discounter chain MiniMax.

*Nova Group, owned by local businessman Dan Adamescu, bought partner Waz’ stake in the company, which publishes Romania Libera daily.

*French dairy producer Bongrain bought control of Delaco.

*Private equity fund Bancroft bought into local Dumagas Transport.

*Turkish card operator acquired local counterpart RomCard

*Oryxa Capital became a new shareholder in local Kandia Excelent.

*In the online media segment, Sanoma Digital bought magazinuldecase.ro

*in real estate Europolis local properties went to CA Immo.

*Telecom company GTS Central Europe bought local firm Datek.

*In tourism, investment fund GED bought Travel House and paravion.ro. GED also invested in printing group Infopress.

*Mechel bought Laminorul Braila while investor Eric Kish sold the stake in Smart Tree to Enterprise Investors.

*Ikea group also bought its local franchise from a group of investors and now runs the Bucharest store directly.

In the end, it was not a bad year for acquisitions; the discounted price at which some of these businesses were sold – well, that’s another story altogether.

Most awaited: Fondul Proprietatea stock listing, Rompetrol debt payment

The listing of Fondul Proprietatea, the investment fund which has been set up to compensate owners whose properties were confiscated during communism, was one of the most awaited moves of the year.  Franklin Templeton manages the fund and Fondul Proprietatea’s stock float is planned for January 2011.

Another story which made headlines was Rompetrol’s USD 570 million debt to the Romanian state. Stemming from their Petromidia refinery’s debt from seven years ago, the debt came due in 2010. With the Romanian state trying to recover as much as possible to fill its almost empty coffers and Rompetrol complaining about cash and the need to keep business afloat and people employed, the situation is likely to trail on for some time.

Crisis takes center stage while new political party gains popularity

The country’s challenging economic situation was met with an equally challenging political set up. Romania started 2010 with a new government, led again by Prime Minister Emil Boc. The Social Democratic Party (PSD), the Liberal Party (PNL) and the Conservative Party (PC) created only quiet opposition throughout the year. The ruling party, the Democratic Liberal Party (PDL), together with the Union of Magyars in Romania (UDMR), control the Government. However, due to the largely unpopular measures the Government had to make, its poll ratings dropped, to the satisfaction of media owner and journalist Dan Diaconescu’s newly created Popular Party. An opinion poll in Romanian media placed both at around 15 percent.

Meanwhile PSD rose to 35-38 percent, with PNL in second at around 21 percent. PSD reshuffled its leadership when former leader Mircea Geoana was defeated in the presidential elections in 2009 by incumbent president Traian Basescu. The helm of the party went to the young Victor Ponta. Besides taking required measures addressing its economic situation, the political system had EU pressure to seriously address corruption and reshuffle the judiciary system. An EC report criticized the country for being unable to adopt the National Integrity Agency (ANI) law in a form allowing it to account for the wealth of public officials, and to prosecute for illegal gains. A revised ANI law was finally adopted in the second half of the year.

Similarly, the Romanian Parliament passed changes to the Constitutional Court allowing suits to proceed despite the invocation of constitutional challenges. This could be a major step in prosecuting corruption cases in Romania, which have enjoyed this technicality historically.

corina@romania-insider.com

This article was originally written for and published in the English - language guide Bucharest, Romania and Beyond, published by partner company City Compass. To get the hard copy of the book, go here.