World Bulletin/News Desk
Romania's President Traian Basescu ratified the latest review of a 4 billion euro aid deal with the IMF on Wednesday, ending a weeks-long standoff over a deal seen as key to the country's economic credibility.
Basescu moved swiftly to clear the agreement after Romania's ruling coalition collapsed last week, a split that had raised doubts over the government's ability to push through reforms that were agreed with the International Monetary Fund.
These include a commitment by Prime Minister Victor Ponta's government to restructure or sell off inefficient state companies that are a legacy of Romania's communist past - a policy that could prove tough to implement in an election year.
Economic growth jumped to 5.2 percent in the last quarter, but Romania remains the second poorest country in the European Union. Wages and living standards are still far below average in the bloc, which it joined in 2007.
The president had previously refused to approve the latest IMF review as it included proposals for a new excise tax on fuels and a government plan to reschedule the bank loans of low income borrowers - policies he opposed.
They will likely still be implemented, but the deal's letter of intent will not mention them.
"I do hope this accord will be implemented for the benefit of Romanians even though some of the measures don't seem to be the most pleasant," Basescu told a press conference.
Separately, Basescu also abruptly endorsed Ponta's newly formed coalition government on Wednesday, just days after he threatened to block its creation, ending another spat that could have prolonged political instability.
Under Romanian law, the president has a largely ceremonial role. But Basescu wields influence at key moments and has a big say in Romania's international agreements.
His opposition to the fuel tax was just the latest spat with his arch rival Ponta.
Romania does not plan to draw on the funds from the latest IMF deal. But their availability provides reassurance for foreign investors concerned about fiscal slippage before a European election and a presidential election later this year.
While aid deals with the IMF and the European Union since 2009 have obliged Romania to bring its budget under tighter control, government efforts to sell assets have been sporadic.
But in 2013, the leftist government launched the first initial public offerings in five years, listing minority stakes in nuclear power producer Nuclearelectrica and gas producer Romgaz.
This year, it aims to list a majority stake in power distributor Electrica and a minority holding in coal-fired power holding Oltenia with deadlines set for June-July. A plan to list hydro power producer Hidroelectrica has hit legal obstacles.
BACKING FOR NEW GOVERNMENT
Ponta's ruling Social Democrats (PSD) cobbled together a new alliance this week after their main coalition partner quit the government. The new administration, which will govern with a reduced majority, was endorsed in a confidence vote in parliament on Tuesday.
But Basescu, a two-term president who is due to step down after the November election, over the weekend questioned Ponta's constitutional right to form a new government and threatened to challenge it in court.
The standoff had threatened to prolong instability that, along with emerging market nerves about the U.S. Federal Reserve winding down its stimulus programme and international tensions over Ukraine, has pressured Romanian assets.
"We reached an agreement," said Basescu at a press conference, adding he would now endorse Ponta's new ministers.
Opposition lawmakers, however, will still mount a separate challenge to Ponta's government in court.
The IMF warned that "significant policy uncertainties imply larger-than-usual" risks to the US outlook on either side, since spending cuts could lower growth, while tax cuts could provide stimulus and expand the economy.
Now the VNO-NCW is calling for the Dutch parliament to reverse a 2015 decision to introduce a cap of 20 percent of annual pay on the bonuses which can be paid out to top managers in the banking industry.
The state-owned energy trading firm Lietuvos Duju Tiekimas said it signed the deal with the Texas company Cheniere Energy.
Adding to the upward pressure for oil is the crisis in the Middle East, where a Saudi-led blockade of Qatar has fuelled concerns of possible conflict.
Bourses in both Paris and Frankfurt dipped after a report from data monitoring company IHS Markit showed Eurozone private sector business activity slowed sharply in June while staying in expansion mode.
Analysts said that while the downturn in the headline readings was disappointing, the economy continued to put in a strong performance.
Crude prices stabilised after diving more than two percent on Tuesday on increasing fears of a global supply glut, as continued production in the US and elsewhere offsets an OPEC output cut deal.
Move estimated to save company $1B in investment costs
However, most other regional markets struggled after Monday's healthy gains, despite being given a positive lead from Wall Street where the Dow and S&P 500 closed at fresh record highs.
The purchase in one fell swoop gives Amazon, which until now has operated almost entirely on the internet, a big presence in the brick-and-mortar world on Main Street, with more than 450 stores in the US, Canada and Britain.
"The Bank of Russia Board of Directors decided to cut the key rate to 9.00 percent per annum," the bank said in a statement. The cut follows a half-point decrease in late April.
Equity traders have suffered a fraught week as the crisis engulfing Donald Trump picks up pace, technology firms tumbled from recent highs and energy plays were hammered by plunging oil prices.
"In May 2017, passenger car registrations across the EU increased by 7.6 percent to 1.387 million units," ACEA said in a statement.