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Overseas Economic Cooperation Operation

Reference

1. Loan Amount and Conditions

Project NameAmount
(Mil. Yen)
Interest Rate
(% per annum)
Repayment Period/
Grace Period(Years)
Procurement
Turceni Project28,7460.7540/10General Untied

2. Executing Agency

The executing entity for the project is S.C. Complexul Energetic Turceni S.A. (address: str. Uzinei, nr.1, Turceni, jud. Gorj. Romania Tel: 40-253-334-322; Fax: 40-253-334-081).

3. Political and Economic Profile of Romania

Romania, the only country in Central and Eastern Europe to be inhabited by Latin peoples, is traditionally a farming nation. It ranks second in both area (237,000 km2, approximately the same size as the main island of Japan) and population (21.7 million) in Central and Eastern Europe, and is endowed with relatively abundant natural resources.

The predecessor to Romania's Social Democratic Party (PSD), the ruling party up to 2004, was the Party of Social Democracy (PDSR), which played a leading role in the overthrow of the Ceauşescu administration. The PSD launched Romania's transition to a market economy in the early 1990s, basically in accordance with the IMF program, by such actions as liberalizing prices and exchanges, and privatizing farm land. Due partly to subsequent reform delays and a sagging economy, the PSD suffered a crushing defeat to the Democratic Alliance in the presidential/general election held in November 1996. The Romanian economy, however, failed to make an upward turn in the wake of the administration change; instead, partly due to the Russian currency crisis in 1998, it continued to register negative growth up to 1999. As the economy showed a recovery trend in 2000 and beyond, ex-president Ion Iliescu was re-elected president in the presidential election held in November 2000, marking the second change in administration. In the presidential election of 2004, Bucharest mayor Traian Basescu, supported by the opposition and central-right alliance, won the run-off balloting, and the administration changed again. Despite these changes, however, the new government is not expected to make any major shifts in its basic policies, since the government policies are based on the common target of accession to the EU. Besides, there is little difference in the policies advocated by the ruling and opposition blocs, including tax cuts.

After starting the transition to a market-oriented economy, Romania was relatively quick in moving beyond the initial confusion to the growth path. Despite negative growth registered for three consecutive years from 1997 through 1999, the country's economy made a turnaround and grew 2.1% in 2000, driven by exports (textiles, leathers, metals, automobiles, and food) mainly bound for the EU. The Romanian economy has maintained a relatively stable trend since then, registering growth of 5.0% in 2002, and 4.9% in 2003. In recent years, while foreign demand from the EU, which accounts for over 65% of Romania's total exports, has declined due to the region's sluggish economy, Romania's economy has been driven by domestic demand including private consumption and investments.

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