Pilot-project on company audits and listing of Hidroelectrica shares by June


These are the Gov’t commitments mentioned in the annex to the letter of intent sent to the IMF.

Through the NationalAgency for Fiscal Administration(ANAF) and the LabourInspection Division, theGovernment plans to set inmotion a series of companyaudits in the second quarter ofthis year, as part of a pilot-projectto identify under-the-counteractivities and tax evasioninstances which will be completedin the upcoming months. TheGovernment assumed this commitmentin February, during thelast round of negotiations withthe International MonetaryFund (IMF), and it has alsoincluded it in the letter of intentsent to Washington. Accordingto the document signed inMarch and cited by Mediafax, itis stipulated in the FiscalAdministration chapter that thispilot-project will be made publicin a press release by end-May.“(…) The process will beinitiated through a pressrelease designed to present theproject to the wide public byend-May, 2014 (structural referencecriterion). The audits,organized together with theLabour Inspection Division,will be conducted in the secondhalf of 2014. The project’sgoal is to enhance voluntarycompliance, reduce tax evasionin the labor segment, and raiseawareness at country level onthe ensuing aspects,” theGovernment announced.Furthermore, the letter ofintent shows a high-level workgroupwas created in October2013 to provide authorities with“a better understanding” of thepoor results in revenue collectionin the third and last quarters oflast year, and the conclusions itreached only reflect the ongoingrestructuring process of ANAF toa limited extent. Consequently,the Government has assumedbefore the IMF the allotment ofadditional resources for “stricteroversight” of the number ofnewly registered companies,income statements – particularlywhere major tax payers are concerned– and payments, the stockand flow of arrears, the numberof audits conducted, and thenumber and amount of paymentfacility agreements concluded.The document also notes theGovernment’s intention to devisea centralized database in conjunctionwith local authoritiesfor managing and assessing datarelated to taxes, fees, and contributionsowed to the general consolidatedbudget, as well as informationon properties. The databaseshould be an importantsource of information for the taxpayersand its objective is “toincrease the level of compliance”by December 31, 2014.

KONIECZNY, PROPRIETATEAFUND: HIDROELECTRICA LISTING- IMPOSSIBLE

According to the same document,the Government hopesHidroelectrica will come backfrom insolvency, and thus, beable to sell 15 percent of thecompany shares on the stockexchange. The Governmentinforms the IMF the deadline forfinalizing the procedure remainsin June. Hidroelectrica becameinsolvent again after theBucharest Court of Appealsadmitted the appeals submittedby energy traders Alpiq, EnergyHolding, and EFT, as well asAndritz Hydro, Alro, Elsid Titu,and the Second District BudgetRevenue Department onFebruary 25, and sent the caseover to the Bucharest Court ofLaw for re-trial.Greg Konieczny, Manager ofProprietatea Fund (FP), believesit will be impossible to listHidroelectrica this year becausethe energy producer becameinsolvent again. Konieczny statedFriday that when discussionsbetween FP and Hidroelectrica’slegal administrator reach a conclusion,the Fund will reevaluatethe company’s contribution afterhaving become insolvent again.FP owns 19.94 percent ofHidroelectrica shares. On achange of topic, American companyFranklin Templeton, whichmanages FP, recommends shareholdersto list the Fund on theSpecialist Fund Market (SFM) ofthe London Stock Exchange byend-2014.

GITENSTEIN: THE REFORMSAGREED – UP WITH THE IMFHAVE IMPROVED ROMANIA’SIMAGE

Because of the situation inUkraine, foreign investors aremore reticent towards investingin neighboring countries, butRomania is much better positionedthan almost any othercountry in the region because ithas implemented many of thereforms agreed-upon with theIMF, Mark Gitenstein, formerU.S. ambassador to Bucharest,stated live on television, inresponse to a question on thepotential impact of the situationin Ukraine on investors’ perceptionof Romania.In Gitenstein’s opinion, oneof the ways in which Romaniacan attract foreign investments isthrough the capital marketreform, which can be achieved byimplementing the measuresidentified and presented in thefirst half of February by a workgroupconsisting of capital market,business, and banking specialists.Lack of predictability isanother reason listed by MarkGitenstein why more and moreforeign investors have reservationsabout coming on Romania.As an example, the formerambassador referred to Romaniacoming in 73rd in a survey oneasiness in conducting businesscarried out by the World Bank,whereas Ukraine and Russia havegone up “dramatically.”

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