Romania: better financial position bolsters trade outlook

ROMANIA

Better Financial Position Bolsters Trade Outlook

Romania's external financial position has improved steadily for two years, but eocnomic proglems remain. The 1984 Economic Plan Suggests a relaxation of the import restraints which resulted in dramatic trade surpluses in 1982 and 1983. As measures taken to boost foreign trade and to stabilize the economy continue, the outlook for U.S. sales to Romania in 1984 is brighter than it has been in recent eyars.

U.S. exports 1983-$186.1 million

U.S. imports 1983-$513.1 million

Hard-currency debt, which topped $12 billion as 1981 ended, was reduced to about $9 billion by the beginning of this year. No rescheduling of debt will be needed in 1984. These developments should allow Romania access to normal banking facilities for trade transactions. Aware that debt rescheduled in 1982 and 1983 comes due in 1985 and 1986, however, bankers will continue to watch closely Romania's economic progress. Large-scale bank financing of Romanian purchases remains unlikely for the foreseeable future.

Romania improved its financial position in 1982-83 by tight curtailment of imports and severe redirection of output from domestic consumption into exports, which resulted in trade surpluses of over $1.5 billion each year. The 1984 plan calls for a further trade surplus through improved export performance, rather than cuts in imports. Industrial production is slated to grow 9.9 percent and agricultural out-put is to increase 8.9 percent, while no increases in household consumption are planned. These ambitious targets are projected to result in foreign trade growth of 13.8 percent and another $1.5 billion positive trade balance.

The 1984 plan also calls for investment growth of 4 percent, the first increase since the 1981 debt crisis. This investment injection will be channeled into industries where it will do the most to spur exports. Further IMF-encouraged adjustments in exchange rates, interest rates, capital costing, and energy pricing policies also aim to create longterm economic efficiency and competitiveness in foreign trade. The Jan. 1 devaluation of the leu from 18.2 to 21.4 per U.S. dollar, for example, will make Romanian goods more competitive in western markets.

The improvements in Romania's financial situation and growing U.S. demand for a variety of Romanian products are expected to boost trade in both directions this year. The recent visits to Bucharest of Vice President George Bush and U.S. Commerce Secretary Malcolm Baldrige contributed to warmer bilateral relations which are also likely to give impetus to trade. At their October 1983 meeting, Secretary Baldrige and Romanian Trade Minister Pungan were confident that trade, which showed a modest recovery in 1983, would increase some $300 million to top $1 billion in 1984.

Increase Romanian demand for U.S. goods is expected primarily in raw materials, agricultural chemicals and technologies, and energy-related equipment. Electronic products, qualitycontrol technologies, machine tools, and agricultural products can also be sold by firms prepared to take countertrade or offer other forms of built-in financing to the Romanian buyer.

The U.S. Commerce Department will sponsor an exhibition at the Bucharest International Fair in October. The record number of American companies participating in the 1983 fair found excellent opportunities to reach Romanian buyers. For further information on official trade promotion activities and on trading with Romania, firms should contact the desk officer for that area, tel. 202-377-2645.

COPYRIGHT 1984 U.S. Government Printing Office
COPYRIGHT 2004 Gale Group