|Romania acceded to the European Union (EU) Jan. 1, 2007. As the first country of Central and Eastern Europe to have official relations with the European Community, in 1974, Romania signed a treaty that included Romania in the Community's Generalized System of Preferences. In 1980, Romania proceeded, officially acknowledging this economic organization by signing the agreement concerning the establishment of the Joint Romania-CEE Commission.
Following the 1989 Romanian Revolution, EU membership was the main goal
of every Romanian government and political party that followed. On Feb. 1, 1995, Romania signed the European Agreement (a framework for the Romanian-European Community relations) of which the main objective was EU integration.
Romania began to implement a number of reforms during the ealry 2000s, preparing for EU accession. The reforms were the consolidation of its democratic systems, the institution of the rule of law, acknowledging respect for human rights, a commitment to personal freedom of expression, and implementing a free-market economy.
Romania is located in the center of Europe between 43° 37'07"-48°15'06" latitude North and 20°15'44"- 29°41'24" longitude East. The country stretches more than 236,391 square kilometers (sq. km). Romania’s surface is 31% mountains, 33% hills, and 36% plains.
The Danube Delta is located north of the Plateau of Dobrudja and has three main arteries: Chilia, Sulina, and Sfantul Gheorghe, through which the Danube flows into the Black Sea. The Danube Delta stretches on the Romanian territory for more than 4,340 sq. km.
Both the Danube and Black Sea are distinct ecosystems that are equally important economically and ecologically to the country. The Danube is a European transport waterway and the Danube-Black Sea and Rhine-Main-Danube canals connect the North Sea and Black Sea.
Nonrenewable natural resources such as fossil fuel reserves are very limited and this is a key issue for energy and economic development, as well as environmental protection.
Nonrenewable natural resources such as iron ore, manganese, gold and silver, multi-metal ores, etc… are scarce, but nonmetallic substances such as salt, sulphur, limestone, dolomite, plaster stone, feldspar, graphite, etc…are readily available.
Romania’s foreign policy includes the development of bilateral and multilateral relations; good neighborhood and regional cooperation; promotion of economic diplomacy; extending the cultural diplomacy and the preservation of natural and cultural identity.
According to Standard & Poor’s (S&P), its stable outlook on the sovereign “balances Romania’s low public sector debt, high growth potential, and the prospect of long-term structural economic improvements within the EU, against its limited budgetary flexibility and weakening external liquidity.” S&P believes that the EU accession supports the ratings because it locks in past reforms and provides a framework for further growth as well as investment-enhancing economic and institutional modernization. Driven by dynamic investment, Standard & Poor’s expect trend GDP growth of 5% to 5.5% over the medium term. “The good track record of economic growth in recent years has led to levels of prosperity and per capita GDP growth in Romania is expected to continue outperforming that of the 'BBB' median, reflecting sustained economic activity.”
S&P has also stated that in the past, Romanian governance problems included poor cost recovery in the state-owned utility sector. However, this is improving as part of the restructuring and privatization of energy distribution and generation. Additionally, World Bank rankings on the ease of doing business do give Romania a place comparable with the rest of the peer group.
Romania's economic structure is still characterized by a large public sector that includes state-owned enterprises (SOEs) and generally loss-making enterprises in the energy and manufacturing sectors. Traditionally, the government supported SOEs by bailing them out and taking over their guaranteed debt. “The previous government began to accelerate the transformation process by stepping up privatizations, liquidations, and restructurings. This market-oriented modernization process has continued under the current government, and the drag of the sector on the public accounts is steadily diminishing, said S&P”
S&P further notes that Romania's economic growth performance since the beginning of the current decade has been satisfactory and stable. “Domestic demand, especially investment, will continue to be the main driver of economic growth in 2006, underpinned by the continued credit boom and rising disposable incomes. Growth rates of 5% to 5.5% per year are feasible through to the end of the decade, absent an unforeseen confidence shock. The sources of growth are likely to be almost exclusively capital deepening and rising total factor productivity,” S&P commented.
S&P’s foreign currency sovereign rating on Romania is BBB-/Stable/A-3, while its local currency rating is BBB/Stable/A-3.