# Official Journal C 170/2009

| | ISSN 1725-2423
  doi:10.3000/17252423.C_2009.170.eng |
| --- | --- |
| Official Journal
  of the European Union | C 170 |
| | |
| English edition | Information and Notices | Volume 5222 July 2009 |

ISSN 1725-2423

doi:10.3000/17252423.C_2009.170.eng

Official Journal

of the European Union

C 170

English edition

Information and Notices

Volume 5222 July 2009

---

| Notice No | Contents | page |
| --- | --- | --- |
| | I   Resolutions, recommendations and opinions |
| | OPINIONS |
| | Council |
| 2009/C 170/01 | Council Opinion of 7 July 2009 on the stability programme of Slovakia, 2008-2011 | 1 |
| 2009/C 170/02 | Council Opinion of 7 July 2009 on the updated convergence programme of Romania, 2008-2011 | 6 |

Notice No

Contents

page

I   Resolutions, recommendations and opinions

OPINIONS

Council

2009/C 170/01

Council Opinion of 7 July 2009 on the stability programme of Slovakia, 2008-2011

1

2009/C 170/02

Council Opinion of 7 July 2009 on the updated convergence programme of Romania, 2008-2011

6

| | II   Information |
| --- | --- |
| | INFORMATION FROM EUROPEAN UNION INSTITUTIONS AND BODIES |
| | Commission |
| 2009/C 170/03 | Non-opposition to a notified concentration (Case COMP/M.5522 — Mitsubishi Corporation/Acciona Energia Internacional/Amper) (
  1
  ) | 12 |
| 2009/C 170/04 | Non-opposition to a notified concentration (Case COMP/M.5532 — Carphone Warehouse/Tiscali UK) (
  1
  ) | 12 |

II   Information

INFORMATION FROM EUROPEAN UNION INSTITUTIONS AND BODIES

Commission

2009/C 170/03

Non-opposition to a notified concentration (Case COMP/M.5522 — Mitsubishi Corporation/Acciona Energia Internacional/Amper) (
  1
  )

1

12

2009/C 170/04

Non-opposition to a notified concentration (Case COMP/M.5532 — Carphone Warehouse/Tiscali UK) (
  1
  )

1

12

| | IV   Notices |
| --- | --- |
| | NOTICES FROM EUROPEAN UNION INSTITUTIONS AND BODIES |
| | Commission |
| 2009/C 170/05 | Euro exchange rates | 13 |
| | NOTICES FROM MEMBER STATES |
| 2009/C 170/06 | Extract from the Decision concerning Kaupthing Bank Luxembourg S.A. pursuant to Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding-up of credit institutions | 14 |

IV   Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS AND BODIES

Commission

2009/C 170/05

Euro exchange rates

13

NOTICES FROM MEMBER STATES

2009/C 170/06

Extract from the Decision concerning Kaupthing Bank Luxembourg S.A. pursuant to Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding-up of credit institutions

14

| | V   Announcements |
| --- | --- |
| | PROCEDURES RELATING TO THE IMPLEMENTATION OF THE COMPETITION POLICY |
| | Commission |
| 2009/C 170/07 | Prior notification of a concentration (Case COMP/M.5590 — 3i Group/H.I.G. Capital/Volnay B.V.) — Candidate case for simplified procedure (
  1
  ) | 15 |

V   Announcements

PROCEDURES RELATING TO THE IMPLEMENTATION OF THE COMPETITION POLICY

Commission

2009/C 170/07

Prior notification of a concentration (Case COMP/M.5590 — 3i Group/H.I.G. Capital/Volnay B.V.) — Candidate case for simplified procedure (
  1
  )

1

15

| | |
| --- | --- |
| | (1)   Text with EEA relevance |

---

(1)   Text with EEA relevance

1

| EN | |
| --- | --- |

EN

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I Resolutions, recommendations and opinions

OPINIONS

Council

| 22.7.2009 | EN | Official Journal of the European Union | C 170/1 |
| --- | --- | --- | --- |

22.7.2009

EN

Official Journal of the European Union

C 170/1

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COUNCIL OPINION

of 7 July 2009

on the stability programme of Slovakia, 2008-2011

2009/C 170/01

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 5(2) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| 1. | On 7 July 2009 the Council examined the stability programme of Slovakia, which covers the period 2008 to 2011. |
| --- | --- |

1.

On 7 July 2009 the Council examined the stability programme of Slovakia, which covers the period 2008 to 2011.

| 2. | Following several years of high GDP growth, the Slovak economy started to lose momentum in the fourth quarter of 2008 when GDP growth slowed down to 2,5 % year-on-year. As a small, open economy that is relatively specialised in the automobile and electronics sectors, Slovakia is affected by the economic downturn through a significant drop in external demand. Exports have been on a steeply declining path since the fourth quarter of 2008 with negative repercussions on industrial production and business confidence. The manufacturing sector is the most hard-hit by the crisis, while the banking sector has been only marginally affected. After a period of gradual decline, the unemployment rate started to rise in the fourth quarter of 2008, against the backdrop of lay-offs due to the economic downturn. Public finances are projected to worsen considerably in 2009 and 2010. The deterioration of the headline general government balance and the structural balance entails a rapid shrinking of the fiscal room for manoeuvre. The overall volume of the stimulus packages adopted by the Slovak authorities in response to the crisis is estimated at around 1⁄2 % of GDP in 2009. Moreover, Slovakia's competitive position has been weakened due to the koruna's appreciation before the euro adoption and the relatively strong wage growth in 2008, which may present an additional challenge. |
| --- | --- |

2.

Following several years of high GDP growth, the Slovak economy started to lose momentum in the fourth quarter of 2008 when GDP growth slowed down to 2,5 % year-on-year. As a small, open economy that is relatively specialised in the automobile and electronics sectors, Slovakia is affected by the economic downturn through a significant drop in external demand. Exports have been on a steeply declining path since the fourth quarter of 2008 with negative repercussions on industrial production and business confidence. The manufacturing sector is the most hard-hit by the crisis, while the banking sector has been only marginally affected. After a period of gradual decline, the unemployment rate started to rise in the fourth quarter of 2008, against the backdrop of lay-offs due to the economic downturn. Public finances are projected to worsen considerably in 2009 and 2010. The deterioration of the headline general government balance and the structural balance entails a rapid shrinking of the fiscal room for manoeuvre. The overall volume of the stimulus packages adopted by the Slovak authorities in response to the crisis is estimated at around 1⁄2 % of GDP in 2009. Moreover, Slovakia's competitive position has been weakened due to the koruna's appreciation before the euro adoption and the relatively strong wage growth in 2008, which may present an additional challenge.

| 3. | The macroeconomic scenario underlying the programme envisages that real GDP growth will fall from 6,4 % in 2008 to 2,4 % in 2009 before recovering gradually to a rate of 4,5 % by 2011. Assessed against the estimates of GDP for the first quarter of 2009, which reveal a contraction of 5,6 % year-on-year, this scenario appears to be based on markedly favourable growth assumptions (2). The Commission services forecast a contraction of 2,6 % in 2009 and a modest recovery of 0,7 % in 2010. In view of the rapid deterioration of the economic outlook for the main trading partners of Slovakia in recent months, exports are projected to decline more markedly while their rebound is likely to be more subdued than expected in the programme. Moreover, in the programme, the recovery of the economy in 2010 is based on the assumption that potential growth will not be affected by the current downturn, which appears to be unlikely given the expected decline in fixed investment.
  The programme projects a slowdown in inflation in 2009 to 2,2 % and a subsequent acceleration in 2010 and 2011, to 3,6 % and 4,1 %, respectively. These estimates appear realistic, but are not fully consistent with the programme higher growth assumptions for 2009. |
| --- | --- |

3.

The macroeconomic scenario underlying the programme envisages that real GDP growth will fall from 6,4 % in 2008 to 2,4 % in 2009 before recovering gradually to a rate of 4,5 % by 2011. Assessed against the estimates of GDP for the first quarter of 2009, which reveal a contraction of 5,6 % year-on-year, this scenario appears to be based on markedly favourable growth assumptions (2). The Commission services forecast a contraction of 2,6 % in 2009 and a modest recovery of 0,7 % in 2010. In view of the rapid deterioration of the economic outlook for the main trading partners of Slovakia in recent months, exports are projected to decline more markedly while their rebound is likely to be more subdued than expected in the programme. Moreover, in the programme, the recovery of the economy in 2010 is based on the assumption that potential growth will not be affected by the current downturn, which appears to be unlikely given the expected decline in fixed investment.

The programme projects a slowdown in inflation in 2009 to 2,2 % and a subsequent acceleration in 2010 and 2011, to 3,6 % and 4,1 %, respectively. These estimates appear realistic, but are not fully consistent with the programme higher growth assumptions for 2009.

| 4. | In 2008, the general government deficit amounted to 2,2 % of GDP, against a target of 2,3 % of GDP set in the previous update of the convergence programme. The slightly lower-than-expected general government deficit is the result of a better starting position from 2007 (by 0,6 % of GDP) and higher-than-expected revenue growth, but also higher-than-expected expenditure growth. Revenues were in particular supported by transfers of pension contributions from the fully-funded pension pillar to the PAYG pension pillar, the sale of extra emission quotas and somewhat higher-than-expected revenue from non-tax items. Unexpected expenditure increases were mainly due to liabilities from past privatisations and debt forgiveness vis-à-vis non-financial corporations. Favourable labour market developments and lower-than-planned spending of local governments however helped to limit expenditure growth. |
| --- | --- |

4.

In 2008, the general government deficit amounted to 2,2 % of GDP, against a target of 2,3 % of GDP set in the previous update of the convergence programme. The slightly lower-than-expected general government deficit is the result of a better starting position from 2007 (by 0,6 % of GDP) and higher-than-expected revenue growth, but also higher-than-expected expenditure growth. Revenues were in particular supported by transfers of pension contributions from the fully-funded pension pillar to the PAYG pension pillar, the sale of extra emission quotas and somewhat higher-than-expected revenue from non-tax items. Unexpected expenditure increases were mainly due to liabilities from past privatisations and debt forgiveness vis-à-vis non-financial corporations. Favourable labour market developments and lower-than-planned spending of local governments however helped to limit expenditure growth.

| 5. | The programme foresees a widening of the general government deficit for 2009 to 3 % of GDP. The bulk of the increase is due to the current slowdown and the operation of automatic stabilisers. The Commission services forecast a more marked increase in the government deficit to 4,7 % of GDP, due to a considerably less favourable macroeconomic scenario. The implied fiscal stance measured as the change in the structural balance, as recalculated by the Commission services on the basis of the information provided in the programme, is around 1⁄2 % and hence mildly expansionary. |
| --- | --- |

5.

The programme foresees a widening of the general government deficit for 2009 to 3 % of GDP. The bulk of the increase is due to the current slowdown and the operation of automatic stabilisers. The Commission services forecast a more marked increase in the government deficit to 4,7 % of GDP, due to a considerably less favourable macroeconomic scenario. The implied fiscal stance measured as the change in the structural balance, as recalculated by the Commission services on the basis of the information provided in the programme, is around 1⁄2 % and hence mildly expansionary.

| 6. | There is no Medium Term Objective (MTO) specified in the stability programme (3), which focuses on maintaining the headline deficit below 3 % of GDP thereby avoiding an excessive deficit procedure. The consolidation efforts are expected to resume in 2010, when the majority of the stimulus measures are to be terminated as the economy recovers, and particularly in 2011. The headline deficit for these two years is planned at 2,9 % and 2,2 % of GDP, respectively. The adjustment is concentrated on the expenditure side where the ratio is projected to fall by 1 percentage point of GDP between 2009 and 2011, mainly due to a reduction of expenses on employees’ compensations and intermediate consumption, social payments and subsidies. The underlying measures are, however, not specified. The revenue fall is projected at 0,3 percentage points of GDP driven by a decrease in social contributions. |
| --- | --- |

6.

There is no Medium Term Objective (MTO) specified in the stability programme (3), which focuses on maintaining the headline deficit below 3 % of GDP thereby avoiding an excessive deficit procedure. The consolidation efforts are expected to resume in 2010, when the majority of the stimulus measures are to be terminated as the economy recovers, and particularly in 2011. The headline deficit for these two years is planned at 2,9 % and 2,2 % of GDP, respectively. The adjustment is concentrated on the expenditure side where the ratio is projected to fall by 1 percentage point of GDP between 2009 and 2011, mainly due to a reduction of expenses on employees’ compensations and intermediate consumption, social payments and subsidies. The underlying measures are, however, not specified. The revenue fall is projected at 0,3 percentage points of GDP driven by a decrease in social contributions.

| 7. | The budgetary targets are subject to significant downside risks. The macroeconomic scenario is overly optimistic. Assumed low levels of unemployment are likely to lead to an underestimation of the social benefits payments. Considering the increasing number of unemployed, the implementation of active and passive labour market measures will require higher-than-budgeted expenditures. A planned significant reduction of employees’ compensations and intermediate consumption amounting to 0,6 percentage points of GDP in 2009-2011 is not supported by further details about the measures required to achieve this result. The planned reduction in subsidies seems difficult to be achieved against the deteriorating macroeconomic environment. The revenue estimates need to be treated with caution based on two counts. First, given the recent economic developments, tax collection may be considerably worse than expected, especially in 2009. Second, the 2009 budget relies on a significant transfer of funds from the fully-funded to the PAYG pension pillar which is not likely to materialize given the low observed take-up by contributors of the option to switch back to the PAYG pillar. |
| --- | --- |

7.

The budgetary targets are subject to significant downside risks. The macroeconomic scenario is overly optimistic. Assumed low levels of unemployment are likely to lead to an underestimation of the social benefits payments. Considering the increasing number of unemployed, the implementation of active and passive labour market measures will require higher-than-budgeted expenditures. A planned significant reduction of employees’ compensations and intermediate consumption amounting to 0,6 percentage points of GDP in 2009-2011 is not supported by further details about the measures required to achieve this result. The planned reduction in subsidies seems difficult to be achieved against the deteriorating macroeconomic environment. The revenue estimates need to be treated with caution based on two counts. First, given the recent economic developments, tax collection may be considerably worse than expected, especially in 2009. Second, the 2009 budget relies on a significant transfer of funds from the fully-funded to the PAYG pension pillar which is not likely to materialize given the low observed take-up by contributors of the option to switch back to the PAYG pillar.

| 8. | The long-term budgetary impact of ageing is slightly higher than the EU average, mainly due to a relatively high increase in pension expenditure during the coming decades. It is therefore important not to backtrack on the pension reform already enacted. In order to preserve the long-term sustainability of public finances in view of an ageing population, it is necessary to continue reforming the PAYG pillar of the pension system and to avoid undermining the stability of the fully-funded pension pillar. The budgetary position in 2008, as estimated in the programme, though improved from the estimated starting position of the previous programme, compounds the budgetary impact of population ageing on the sustainability gap. If the 2009 budgetary position as projected by the Commission services’ spring 2009 forecast was taken as the starting point, the sustainability gap would worsen substantially. Achieving higher primary surpluses over the medium term, as foreseen in the programme, would contribute to reducing risks to the sustainability of public finances, which are currently at a medium level. |
| --- | --- |

8.

The long-term budgetary impact of ageing is slightly higher than the EU average, mainly due to a relatively high increase in pension expenditure during the coming decades. It is therefore important not to backtrack on the pension reform already enacted. In order to preserve the long-term sustainability of public finances in view of an ageing population, it is necessary to continue reforming the PAYG pillar of the pension system and to avoid undermining the stability of the fully-funded pension pillar. The budgetary position in 2008, as estimated in the programme, though improved from the estimated starting position of the previous programme, compounds the budgetary impact of population ageing on the sustainability gap. If the 2009 budgetary position as projected by the Commission services’ spring 2009 forecast was taken as the starting point, the sustainability gap would worsen substantially. Achieving higher primary surpluses over the medium term, as foreseen in the programme, would contribute to reducing risks to the sustainability of public finances, which are currently at a medium level.

| 9. | Slovakia has a non-binding multi-annual budgetary framework with three-year budgetary planning. Despite the recommendation in the 2007 Council Opinion, binding rules such as expenditure ceilings have not been introduced. Deficit targets set out in the past convergence programmes have been achieved mainly due to stronger-than-expected economic performance. However, expenditure plans outlined in the medium-term budgetary frameworks have always been exceeded in the past and subsequently revised upwards. This makes advisable the introduction of a legally binding expenditure rule to ensure fiscal discipline in a context of less buoyant revenues. With respect to implementation of institutional reforms, the stability programme notes that no significant changes have occurred since the last update of the convergence programme. In June 2008, Slovak authorities adopted the Modernisation Programme ‘Slovakia 21’ which includes several measures aimed at simplification of tax and social contribution systems and creation of an integrated system of collection of taxes, customs duties, health and social contributions. To this end, a single agency for tax collection is expected to be established by 2013. The implementation of IT systems enabling real-time electronic data exchange among public and private sector is also envisaged. These measures would improve the efficiency of public administration. |
| --- | --- |

9.

Slovakia has a non-binding multi-annual budgetary framework with three-year budgetary planning. Despite the recommendation in the 2007 Council Opinion, binding rules such as expenditure ceilings have not been introduced. Deficit targets set out in the past convergence programmes have been achieved mainly due to stronger-than-expected economic performance. However, expenditure plans outlined in the medium-term budgetary frameworks have always been exceeded in the past and subsequently revised upwards. This makes advisable the introduction of a legally binding expenditure rule to ensure fiscal discipline in a context of less buoyant revenues. With respect to implementation of institutional reforms, the stability programme notes that no significant changes have occurred since the last update of the convergence programme. In June 2008, Slovak authorities adopted the Modernisation Programme ‘Slovakia 21’ which includes several measures aimed at simplification of tax and social contribution systems and creation of an integrated system of collection of taxes, customs duties, health and social contributions. To this end, a single agency for tax collection is expected to be established by 2013. The implementation of IT systems enabling real-time electronic data exchange among public and private sector is also envisaged. These measures would improve the efficiency of public administration.

| 10. | In response to the financial crisis, the Slovak authorities introduced a full guarantee for deposits. More stringent liquidity requirements for banks were introduced by the National Bank of Slovakia. In order to alleviate the impact of potential credit tightening measures for the corporate sector, especially for SMEs, the Slovak authorities recapitalised two state-owned banks (the Slovak Guarantee and Development Bank and Eximbanka) and opened a credit line with the European Investment Bank. A memorandum on cooperation and exchange of information for co-financing of SMEs was signed between the Ministry of Finance, the Slovak Bank Association, Eximbanka and the Slovak Guarantee and Development Bank with the aim of providing bank guarantees for loans issued by commercial banks to SMEs. |
| --- | --- |

10.

In response to the financial crisis, the Slovak authorities introduced a full guarantee for deposits. More stringent liquidity requirements for banks were introduced by the National Bank of Slovakia. In order to alleviate the impact of potential credit tightening measures for the corporate sector, especially for SMEs, the Slovak authorities recapitalised two state-owned banks (the Slovak Guarantee and Development Bank and Eximbanka) and opened a credit line with the European Investment Bank. A memorandum on cooperation and exchange of information for co-financing of SMEs was signed between the Ministry of Finance, the Slovak Bank Association, Eximbanka and the Slovak Guarantee and Development Bank with the aim of providing bank guarantees for loans issued by commercial banks to SMEs.

| 11. | In view of the limited fiscal room for manoeuvre due to the external imbalances, the limited fiscal stimulus package for 2009 and 2010 adopted by Slovakia appears to be an adequate response to the economic downturn. On the revenue side, the main measures include a temporary increase in tax-free income, higher in-work benefits for low-income employees, a decrease in social contributions for self-employed and tax reliefs for business R&D activities. The main expenditure measures include subsidies for R&D projects carried out by businesses, additional funding of SMEs and social enterprises, a car scrapping scheme and subsidies to create and sustain employment. The total volume of the measures is estimated by the Slovak authorities at around 1⁄2 % of GDP in each year (2009 and 2010). The net impact of the fiscal measures amounts to 0,4 % of GDP. In addition, the Slovak authorities plan to improve absorption of EU funds and accelerate the implementation of public private partnerships (PPP) for motorway construction. The adopted measures are in line with the European Economic Recovery Plan in that they are targeted on disadvantaged groups and in most cases temporary. With respect to the timeliness, the implementation of the stimulus packages is somewhat back-loaded in the sense that only half of the total fiscal impact will occur in 2009. While the PPP projects for transport infrastructure show the potential of a significant boost to the economy, their implementation may be postponed due to administrative and credit constraints. Overall, the stimulus measures are likely to help mitigate the adverse impact of the crisis on domestic demand and labour market.
  They are related to the medium-term reform agenda and the country-specific recommendations proposed by the Commission on 28 January 2009 under the Lisbon Strategy for Growth and Jobs and endorsed by the Spring European Council on 19 March. |
| --- | --- |

11.

In view of the limited fiscal room for manoeuvre due to the external imbalances, the limited fiscal stimulus package for 2009 and 2010 adopted by Slovakia appears to be an adequate response to the economic downturn. On the revenue side, the main measures include a temporary increase in tax-free income, higher in-work benefits for low-income employees, a decrease in social contributions for self-employed and tax reliefs for business R&D activities. The main expenditure measures include subsidies for R&D projects carried out by businesses, additional funding of SMEs and social enterprises, a car scrapping scheme and subsidies to create and sustain employment. The total volume of the measures is estimated by the Slovak authorities at around 1⁄2 % of GDP in each year (2009 and 2010). The net impact of the fiscal measures amounts to 0,4 % of GDP. In addition, the Slovak authorities plan to improve absorption of EU funds and accelerate the implementation of public private partnerships (PPP) for motorway construction. The adopted measures are in line with the European Economic Recovery Plan in that they are targeted on disadvantaged groups and in most cases temporary. With respect to the timeliness, the implementation of the stimulus packages is somewhat back-loaded in the sense that only half of the total fiscal impact will occur in 2009. While the PPP projects for transport infrastructure show the potential of a significant boost to the economy, their implementation may be postponed due to administrative and credit constraints. Overall, the stimulus measures are likely to help mitigate the adverse impact of the crisis on domestic demand and labour market.

They are related to the medium-term reform agenda and the country-specific recommendations proposed by the Commission on 28 January 2009 under the Lisbon Strategy for Growth and Jobs and endorsed by the Spring European Council on 19 March.

| 12. | The projected fiscal stance is mildly expansionary in 2009 according to the Commission services’ spring 2009 forecast due to the implementation of the fiscal stimulus package. The structural balance is set to improve marginally after 2009 as a result of the planned budgetary consolidation, in particular cuts on the expenditure side. However, the safety margin against breaching the 3 % of GDP reference value is not respected over the whole programme period. The achievement of fiscal targets is likely to be difficult given the programme's markedly favourable macroeconomic scenario and a lack of concrete measures to back up the planned expenditure cuts. |
| --- | --- |

12.

The projected fiscal stance is mildly expansionary in 2009 according to the Commission services’ spring 2009 forecast due to the implementation of the fiscal stimulus package. The structural balance is set to improve marginally after 2009 as a result of the planned budgetary consolidation, in particular cuts on the expenditure side. However, the safety margin against breaching the 3 % of GDP reference value is not respected over the whole programme period. The achievement of fiscal targets is likely to be difficult given the programme's markedly favourable macroeconomic scenario and a lack of concrete measures to back up the planned expenditure cuts.

| 13. | As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme provides nearly all the required and optional data (4). |
| --- | --- |

13.

As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme provides nearly all the required and optional data (4).

The overall conclusion is that fiscal policy in Slovakia will be mildly expansionary in 2009 and turn restrictive from 2010 on. The budgetary projections presented in the stability programme are based on markedly favourable macroeconomic assumptions. The risks to the budgetary targets are clearly negative. The expansionary fiscal stance in 2009, including the limited stimulus measures, appears appropriate given the competitiveness challenge and is therefore in line with the EERP. However, achieving medium-term budgetary targets will require more significant structural consolidation after 2009 than envisaged in the programme. The consolidation effort needs to be backed up by concrete expenditure measures. In addition, the deterioration of public finances presents a risk also for long-term sustainability. In this context, it is crucial to continue reforming the PAYG pillar of the pension system and to avoid undermining the stability of the fully-funded pension pillar.

In view of the above assessment, Slovakia is invited to:

| (i) | implement the anti-crisis measures in line with the EERP as planned and within the framework of the Stability and Growth Pact; |
| --- | --- |

(i)

implement the anti-crisis measures in line with the EERP as planned and within the framework of the Stability and Growth Pact;

| (ii) | ensure consolidation in 2010 as the economy recovers and beyond. The budgetary strategy and consolidation path should be backed up with specific measures for reducing expenditure from 2010 onwards, which should be supported by the introduction of legally binding expenditure ceilings for the general government to ensure fiscal discipline in a less buoyant revenue scenario; |
| --- | --- |

(ii)

ensure consolidation in 2010 as the economy recovers and beyond. The budgetary strategy and consolidation path should be backed up with specific measures for reducing expenditure from 2010 onwards, which should be supported by the introduction of legally binding expenditure ceilings for the general government to ensure fiscal discipline in a less buoyant revenue scenario;

| (iii) | continue reforming the PAYG pillar of the pension system and avoid undermining the stability of the fully-funded pension pillar, given the upcoming challenges of an ageing population, in order to improve the long-term sustainability of public finance. |
| --- | --- |

(iii)

continue reforming the PAYG pillar of the pension system and avoid undermining the stability of the fully-funded pension pillar, given the upcoming challenges of an ageing population, in order to improve the long-term sustainability of public finance.

Comparison of key macroeconomic and budgetary projections

| | | 2007 | 2008 | 2009 | 2010 | 2011 |
| --- | --- | --- | --- | --- | --- | --- |
| Real GDP (% change) | SP Apr 2009 | 10,4 | 6,4 | 2,4 | 3,6 | 4,5 |
| COM Spring 2009 | 10,4 | 6,4 | –2,6 | 0,7 | n.a. |
| CP Nov 2007 | 8,8 | 6,8 | 5,8 | 5,0 | n.a. |
| HICP inflation (%) | SP Apr 2009 | 1,9 | 3,9 | 2,2 | 3,6 | 4,1 |
| COM Spring 2009 | 1,9 | 3,9 | 2,0 | 2,4 | n.a. |
| CP Nov 2007 | 1,7 | 2,3 | 2,6 | 2,7 | n.a. |
| Output gap (5) (% of potential GDP) | SP Apr 2009 | 5,1 | 6,5 | 3,5 | 1,7 | 1,0 |
| COM Spring 2009 (6) | 6,5 | 8,0 | 0,9 | –2,2 | n.a. |
| CP Nov 2007 | 1,8 | 2,3 | 2,1 | 1,4 | n.a. |
| Net lending/borrowing vis-à-vis the rest of the world (% of GDP) | SP Apr 2009 | –4,6 | –5,8 | –4,2 | –2,9 | –2,6 |
| COM Spring 2009 | –4,7 | –5,6 | –7,6 | –6,2 | n.a. |
| CP Nov 2007 | –3,4 | –1,9 | –1,1 | –0,4 | n.a. |
| General government revenue (% of GDP) | SP Apr 2009 | 32,7 | 33,4 | 32,1 | 31,6 | 31,8 |
| COM Spring 2009 | 32,5 | 32,7 | 33,6 | 34,1 | n.a. |
| CP Nov 2007 | 33,2 | 33,0 | 31,8 | 31,8 | n.a. |
| General government expenditure (% of GDP) | SP Apr 2009 | 34,6 | 35,6 | 35,1 | 34,5 | 34,1 |
| COM Spring 2009 | 34,4 | 34,9 | 38,3 | 39,4 | n.a. |
| CP Nov 2007 | 35,7 | 35,3 | 33,7 | 32,6 | n.a. |
| General government balance (% of GDP) | SP Apr 2009 | –1,9 | –2,2 | –3,0 | –2,9 | –2,2 |
| COM Spring 2009 | –1,9 | –2,2 | –4,7 | –5,4 | n.a. |
| CP Nov 2007 | –2,5 | –2,3 | –1,8 | –0,8 | n.a. |
| Primary balance (% of GDP) | SP Apr 2009 | –0,6 | –0,9 | –1,7 | –1,7 | –1,0 |
| COM Spring 2009 | –0,5 | –0,9 | –3,3 | –4,0 | n.a. |
| CP Nov 2007 | –1,0 | –0,9 | –0,3 | 0,5 | n.a. |
| Cyclically-adjusted balance (7) (% of GDP) | SP Apr 2009 | –3,4 | –4,1 | –4,0 | –3,4 | –2,5 |
| COM Spring 2009 | –3,8 | –4,5 | –4,9 | –4,7 | n.a. |
| CP Nov 2007 | –3,0 | –3,0 | –2,4 | –1,2 | n.a. |
| Structural balance (8) (% of GDP) | SP Apr 2009 | –4,2 | –3,8 | –4,4 | –3,5 | –2,6 |
| COM Spring 2009 | –3,8 | –4,7 | –5,0 | –4,7 | n.a. |
| CP Nov 2007 | –3,0 | –3,1 | –2,4 | –1,2 | n.a. |
| Government gross debt (% of GDP) | SP Apr 2009 | 29,4 | 27,6 | 31,4 | 32,7 | 32,7 |
| COM Spring 2009 | 29,4 | 27,6 | 32,2 | 36,3 | n.a. |
| CP Nov 2007 | 30,6 | 30,8 | 30,5 | 29,5 | n.a. |
| Stability programme (SP); Commission services’ April 2009 spring forecasts (COM); Commission services’ calculations. |

2007

2008

2009

2010

2011

Real GDP (% change)

SP Apr 2009

10,4

6,4

2,4

3,6

4,5

COM Spring 2009

10,4

6,4

–2,6

0,7

n.a.

CP Nov 2007

8,8

6,8

5,8

5,0

n.a.

HICP inflation (%)

SP Apr 2009

1,9

3,9

2,2

3,6

4,1

COM Spring 2009

1,9

3,9

2,0

2,4

n.a.

CP Nov 2007

1,7

2,3

2,6

2,7

n.a.

Output gap (5) (% of potential GDP)

SP Apr 2009

5,1

6,5

3,5

1,7

1,0

COM Spring 2009 (6)

6,5

8,0

0,9

–2,2

n.a.

CP Nov 2007

1,8

2,3

2,1

1,4

n.a.

Net lending/borrowing vis-à-vis the rest of the world (% of GDP)

SP Apr 2009

–4,6

–5,8

–4,2

–2,9

–2,6

COM Spring 2009

–4,7

–5,6

–7,6

–6,2

n.a.

CP Nov 2007

–3,4

–1,9

–1,1

–0,4

n.a.

General government revenue (% of GDP)

SP Apr 2009

32,7

33,4

32,1

31,6

31,8

COM Spring 2009

32,5

32,7

33,6

34,1

n.a.

CP Nov 2007

33,2

33,0

31,8

31,8

n.a.

General government expenditure (% of GDP)

SP Apr 2009

34,6

35,6

35,1

34,5

34,1

COM Spring 2009

34,4

34,9

38,3

39,4

n.a.

CP Nov 2007

35,7

35,3

33,7

32,6

n.a.

General government balance (% of GDP)

SP Apr 2009

–1,9

–2,2

–3,0

–2,9

–2,2

COM Spring 2009

–1,9

–2,2

–4,7

–5,4

n.a.

CP Nov 2007

–2,5

–2,3

–1,8

–0,8

n.a.

Primary balance (% of GDP)

SP Apr 2009

–0,6

–0,9

–1,7

–1,7

–1,0

COM Spring 2009

–0,5

–0,9

–3,3

–4,0

n.a.

CP Nov 2007

–1,0

–0,9

–0,3

0,5

n.a.

Cyclically-adjusted balance (7) (% of GDP)

SP Apr 2009

–3,4

–4,1

–4,0

–3,4

–2,5

COM Spring 2009

–3,8

–4,5

–4,9

–4,7

n.a.

CP Nov 2007

–3,0

–3,0

–2,4

–1,2

n.a.

Structural balance (8) (% of GDP)

SP Apr 2009

–4,2

–3,8

–4,4

–3,5

–2,6

COM Spring 2009

–3,8

–4,7

–5,0

–4,7

n.a.

CP Nov 2007

–3,0

–3,1

–2,4

–1,2

n.a.

Government gross debt (% of GDP)

SP Apr 2009

29,4

27,6

31,4

32,7

32,7

COM Spring 2009

29,4

27,6

32,2

36,3

n.a.

CP Nov 2007

30,6

30,8

30,5

29,5

n.a.

Stability programme (SP); Commission services’ April 2009 spring forecasts (COM); Commission services’ calculations.

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website: http://ec.europa.eu/economy_finance/about/activities/sgp/main_en.htm

(2)  The programme presents an alternative, not fully fledged scenario, which is based on favourable growth assumptions for 2009 and more plausible assumptions for 2010, as it expects GDP growth to fall from 6,4 % in 2008 to - 1 % in 2009 before recovering to 1 % in 2010.

(3)  In the November 2007 update of the convergence programme, it was specified as a structural deficit (i.e. cyclically adjusted and net of one-off measures) of 1 % of GDP to be achieved by 2010.

(4)  In particular, changes in inventories and net acquisition of valuables in section on macroeconomic prospects are missing. Some sections lack 2007 data (which were, however, additionally provided upon request).

(5)  The 2007 data on real GDP, HICP inflation were provided on a bilateral basis.

(6)  Output gaps and cyclically-adjusted balances according to the programmes as recalculated by Commission services on the basis of the information in the programmes.

(7)  Based on estimated potential growth of 5,6 %, 4,9 %, 4,4 % and 3,9 % respectively in the period 2007-2010.

(8)  Cyclically-adjusted balance excluding one-off and other temporary measures. One-off and other temporary measures are 0,8 % of GDP in 2007, 0,4 % of GDP in 2009, 0,1 of GDP in 2009 and 2010 — deficit-increasing and 0,3 % of GDP in 2008 deficit-reducing according to the most recent programme and 0,2 % of GDP in 2008 and 0,1 % of GDP in 2009 and 2011 deficit-increasing in the Commission services’ forecast.

Source:

Stability programme (SP); Commission services’ April 2009 spring forecasts (COM); Commission services’ calculations.

---

| 22.7.2009 | EN | Official Journal of the European Union | C 170/6 |
| --- | --- | --- | --- |

22.7.2009

EN

Official Journal of the European Union

C 170/6

---

COUNCIL OPINION

of 7 July 2009

on the updated convergence programme of Romania, 2008-2011

2009/C 170/02

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Community,

Having regard to Council Regulation (EC) No 1466/97 of 7 July 1997 on the strengthening of the surveillance of budgetary positions and the surveillance and coordination of economic policies (1), and in particular Article 9(3) thereof,

Having regard to the recommendation of the Commission,

After consulting the Economic and Financial Committee,

HAS DELIVERED THIS OPINION:

| 1. | On 7 July 2009 the Council examined the updated convergence programme of Romania, which covers the period 2008 to 2011. |
| --- | --- |

1.

On 7 July 2009 the Council examined the updated convergence programme of Romania, which covers the period 2008 to 2011.

| 2. | GDP growth in Romania averaged 6,3 % annually between 2002 and 2008. The boom, which was fuelled by foreign direct investment and other capital inflows, has led to overheating and unsustainable imbalances. The current account deficit peaked at 13,5 % of GDP in 2007 and decreased only marginally to 12,3 % of GDP in 2008. The high external borrowing was also driven by a pro-cyclical fiscal policy with the government deficit more than doubling from 2,5 % of GDP in 2007 to 5,4 % of GDP in 2008. During the first half of 2008, the degree of restrictiveness of monetary policy increased significantly, amid successive policy rate hikes up to 10,25 % in July, following excess domestic demand, currency weakening and adverse supply shocks. Since the beginning of 2009, the central bank maintained a prudent monetary policy stance and has cut the policy rate by a cumulative 75 bps since February 2009 in two steps, following the reduction of demand pressures and easing inflationary pressures. The global economic downturn and increased investor-risk aversion towards home-grown vulnerabilities have triggered a significant drop in capital inflows to Romania. This resulted in a sharp deceleration of GDP growth in the fourth quarter of 2008, followed by a contraction of 6 1⁄4 % year-on-year in the first quarter of 2009. Pressures on the exchange rate also increased, with the RON depreciating by 7 % in January 2009, following a 10 % depreciation in 2008. In order to cushion the effects of the sharp drop in private capital inflows and to facilitate an orderly adjustment of the external deficit, Romania has been granted a large (EUR 20 billion) international financial assistance package (2) from the EU, the IMF, the World Bank, the EIB and the EBRD. A cornerstone of the package's economic policy conditions is fiscal consolidation, targeting a gradual reduction of the public deficit from 5,4 % of GDP in 2008 to 5,1 % in 2009, 4,1 % in 2010 and below 3 % in 2011. Furthermore, the Romanian government has committed to undertake specific measures aimed at improving expenditure control and fiscal governance, among others the restructuring of the public compensation system, the introduction of a unified pay system for public employees, a reform of the public pension system, a binding medium-term budgetary framework and the establishment of an independent fiscal council. Measures will also be taken to improve financial sector supervision and stepping up the pace of structural reform. |
| --- | --- |

2.

GDP growth in Romania averaged 6,3 % annually between 2002 and 2008. The boom, which was fuelled by foreign direct investment and other capital inflows, has led to overheating and unsustainable imbalances. The current account deficit peaked at 13,5 % of GDP in 2007 and decreased only marginally to 12,3 % of GDP in 2008. The high external borrowing was also driven by a pro-cyclical fiscal policy with the government deficit more than doubling from 2,5 % of GDP in 2007 to 5,4 % of GDP in 2008. During the first half of 2008, the degree of restrictiveness of monetary policy increased significantly, amid successive policy rate hikes up to 10,25 % in July, following excess domestic demand, currency weakening and adverse supply shocks. Since the beginning of 2009, the central bank maintained a prudent monetary policy stance and has cut the policy rate by a cumulative 75 bps since February 2009 in two steps, following the reduction of demand pressures and easing inflationary pressures. The global economic downturn and increased investor-risk aversion towards home-grown vulnerabilities have triggered a significant drop in capital inflows to Romania. This resulted in a sharp deceleration of GDP growth in the fourth quarter of 2008, followed by a contraction of 6 1⁄4 % year-on-year in the first quarter of 2009. Pressures on the exchange rate also increased, with the RON depreciating by 7 % in January 2009, following a 10 % depreciation in 2008. In order to cushion the effects of the sharp drop in private capital inflows and to facilitate an orderly adjustment of the external deficit, Romania has been granted a large (EUR 20 billion) international financial assistance package (2) from the EU, the IMF, the World Bank, the EIB and the EBRD. A cornerstone of the package's economic policy conditions is fiscal consolidation, targeting a gradual reduction of the public deficit from 5,4 % of GDP in 2008 to 5,1 % in 2009, 4,1 % in 2010 and below 3 % in 2011. Furthermore, the Romanian government has committed to undertake specific measures aimed at improving expenditure control and fiscal governance, among others the restructuring of the public compensation system, the introduction of a unified pay system for public employees, a reform of the public pension system, a binding medium-term budgetary framework and the establishment of an independent fiscal council. Measures will also be taken to improve financial sector supervision and stepping up the pace of structural reform.

| 3. | The macroeconomic scenario underlying the programme envisages that real GDP will contract by 4 % in 2009, followed by 0,1 % growth in 2010 and 2,4 % in 2011. This scenario, which was finalised in May, is in line with the Commission services’ spring 2009 forecasts; in view of the worse-than-expected GDP growth contraction in the first quarter of 2009 as well as the uncertainty related to the global economic downturn and the ongoing correction of economic imbalances in Romania, it now appears to be based on slightly favourable growth assumptions. The programme’s projections for inflation appear realistic. The anticipated reduction of the current account deficit from 12,3 % of GDP in 2008 to 7,5 % in 2009, 6,5 % in 2010 and 6,3 % in 2011 appears to be in line with the domestic and external demand projections. |
| --- | --- |

3.

The macroeconomic scenario underlying the programme envisages that real GDP will contract by 4 % in 2009, followed by 0,1 % growth in 2010 and 2,4 % in 2011. This scenario, which was finalised in May, is in line with the Commission services’ spring 2009 forecasts; in view of the worse-than-expected GDP growth contraction in the first quarter of 2009 as well as the uncertainty related to the global economic downturn and the ongoing correction of economic imbalances in Romania, it now appears to be based on slightly favourable growth assumptions. The programme’s projections for inflation appear realistic. The anticipated reduction of the current account deficit from 12,3 % of GDP in 2008 to 7,5 % in 2009, 6,5 % in 2010 and 6,3 % in 2011 appears to be in line with the domestic and external demand projections.

| 4. | For 2008, the programme update estimates the deficit outcome for 2008 at 5,4 % of GDP, against a target of 2,9 % of GDP set in the previous update of the convergence programme. The significant deviation is mainly due to weak budgetary planning and execution, which resulted in substantially higher-than-planned current spending, notably in public wages and social transfers. In addition, overly optimistic revenue projections did not materialise and a sudden drop in revenue collection in the last two months of the year owing to the economic slowdown added to the worse-than-expected outcome. |
| --- | --- |

4.

For 2008, the programme update estimates the deficit outcome for 2008 at 5,4 % of GDP, against a target of 2,9 % of GDP set in the previous update of the convergence programme. The significant deviation is mainly due to weak budgetary planning and execution, which resulted in substantially higher-than-planned current spending, notably in public wages and social transfers. In addition, overly optimistic revenue projections did not materialise and a sudden drop in revenue collection in the last two months of the year owing to the economic slowdown added to the worse-than-expected outcome.

| 5. | The update of the convergence programme targets a deficit of 5,1 % of GDP in 2009. The 2009 budget adopted in February 2009 contains several measures to lower the deficit, including a recruitment freeze and the reduction of various bonuses in the public sector, cuts in expenditure for goods and services and subsidies, a 3,3 percentage points rise in the pension contribution rate and a bringing forward of the schedule to increase excise taxes. In the budget rectification approved in April 2009, the government has adopted additional expenditure-driven fiscal adjustment measures, including further cuts in the public sector wage bill, expenditure on goods and services, some capital spending and subsidies. On the revenue side, measures in the amended 2009 budget aim at eliminating certain tax deductions and allowances (in particular for company cars and depreciation of revalued assets).
  On the other hand, the government plans a substantial increase in public investment in 2009 compared with 2008, also as a means to sustain the economic recovery. In addition, given the need for fiscal consolidation, only a limited set of fiscal stimulus measures (amounting to roughly 3⁄4 % of GDP) has been adopted aiming at supporting businesses, labour market and household income. The overall fiscal stance balance (cyclically-adjusted net of one-off and other temporary measures) in 2009, as measured by the almost 3 % of GDP reduction in the structural balance recalculated by the Commission services using the commonly agreed methodology based on the information provided in the programme, is estimated to be strongly restrictive. |
| --- | --- |

5.

The update of the convergence programme targets a deficit of 5,1 % of GDP in 2009. The 2009 budget adopted in February 2009 contains several measures to lower the deficit, including a recruitment freeze and the reduction of various bonuses in the public sector, cuts in expenditure for goods and services and subsidies, a 3,3 percentage points rise in the pension contribution rate and a bringing forward of the schedule to increase excise taxes. In the budget rectification approved in April 2009, the government has adopted additional expenditure-driven fiscal adjustment measures, including further cuts in the public sector wage bill, expenditure on goods and services, some capital spending and subsidies. On the revenue side, measures in the amended 2009 budget aim at eliminating certain tax deductions and allowances (in particular for company cars and depreciation of revalued assets).

On the other hand, the government plans a substantial increase in public investment in 2009 compared with 2008, also as a means to sustain the economic recovery. In addition, given the need for fiscal consolidation, only a limited set of fiscal stimulus measures (amounting to roughly 3⁄4 % of GDP) has been adopted aiming at supporting businesses, labour market and household income. The overall fiscal stance balance (cyclically-adjusted net of one-off and other temporary measures) in 2009, as measured by the almost 3 % of GDP reduction in the structural balance recalculated by the Commission services using the commonly agreed methodology based on the information provided in the programme, is estimated to be strongly restrictive.

| 6. | The main goal of the medium-term budgetary strategy in the programme is to progress towards the medium-term objective (MTO) of a structural deficit of 0,9 % of GDP, with the aim of achieving it by 2012 (i.e. beyond the programme period). The general government headline deficit is projected to be gradually reduced from 5,1 % of GDP in 2009 to 4,1 % of GDP in 2010 and 2,9 % of GDP in 2011. The primary balance follows a similar trend. The adjustment path is based on a reduction of expenditure by 1,5 percentage point of GDP, notably substantial cuts in compensation of employees and intermediate consumption. These cuts are partly offset by a significant increase in public investment as a share of GDP. Revenue is expected to increase by 1,1 percentage point of GDP, notably as a result of an assumed increase in EU funds and the increase in social security contributions in 2009. After 2009, the programme does not sufficiently specify the concrete measures and their expected budgetary impact underlying the planned deficit reduction, in particular with respect to the significant decrease in compensation of employees. Government gross debt stood at 13,6 % of GDP in 2008 and is projected in the programme to steeply increase to 22 % of GDP in 2011 due to the high primary deficits and a significant increase in interest payments on government debt. |
| --- | --- |

6.

The main goal of the medium-term budgetary strategy in the programme is to progress towards the medium-term objective (MTO) of a structural deficit of 0,9 % of GDP, with the aim of achieving it by 2012 (i.e. beyond the programme period). The general government headline deficit is projected to be gradually reduced from 5,1 % of GDP in 2009 to 4,1 % of GDP in 2010 and 2,9 % of GDP in 2011. The primary balance follows a similar trend. The adjustment path is based on a reduction of expenditure by 1,5 percentage point of GDP, notably substantial cuts in compensation of employees and intermediate consumption. These cuts are partly offset by a significant increase in public investment as a share of GDP. Revenue is expected to increase by 1,1 percentage point of GDP, notably as a result of an assumed increase in EU funds and the increase in social security contributions in 2009. After 2009, the programme does not sufficiently specify the concrete measures and their expected budgetary impact underlying the planned deficit reduction, in particular with respect to the significant decrease in compensation of employees. Government gross debt stood at 13,6 % of GDP in 2008 and is projected in the programme to steeply increase to 22 % of GDP in 2011 due to the high primary deficits and a significant increase in interest payments on government debt.

| 7. | The budgetary outcomes in all programme years are subject to downside risks. In 2009, the risks stem from the macroeconomic outlook, which could be worse than anticipated. In addition, there are risks concerning the effective implementation of the planned expenditure measures in 2009, notably given the slippages in the public wage bill already observed since the beginning of 2009 and potential spending pressures in an electoral year. Moreover, in 2010 and 2011, the achievement of the budgetary targets needs to be underpinned by concrete measures. In view of the negative risks to the budgetary targets, the debt ratio could increase more than projected in the programme. |
| --- | --- |

7.

The budgetary outcomes in all programme years are subject to downside risks. In 2009, the risks stem from the macroeconomic outlook, which could be worse than anticipated. In addition, there are risks concerning the effective implementation of the planned expenditure measures in 2009, notably given the slippages in the public wage bill already observed since the beginning of 2009 and potential spending pressures in an electoral year. Moreover, in 2010 and 2011, the achievement of the budgetary targets needs to be underpinned by concrete measures. In view of the negative risks to the budgetary targets, the debt ratio could increase more than projected in the programme.

| 8. | The long-term budgetary impact of ageing is well above the EU average, mainly as a result of a relatively high increase in pension expenditure as a share of GDP over the coming decades. The budgetary position in 2008, as estimated in the programme, which is worse than the starting position of the previous programme, compounds the budgetary impact of population ageing on the sustainability gap. Reducing the primary deficit over the medium term, as already foreseen in the programme, further reforming the pension system to curb the substantial increase in age-related expenditures and improving the efficiency of healthcare spending would contribute to reducing risks to the sustainability of public finances, which are currently at high level. |
| --- | --- |

8.

The long-term budgetary impact of ageing is well above the EU average, mainly as a result of a relatively high increase in pension expenditure as a share of GDP over the coming decades. The budgetary position in 2008, as estimated in the programme, which is worse than the starting position of the previous programme, compounds the budgetary impact of population ageing on the sustainability gap. Reducing the primary deficit over the medium term, as already foreseen in the programme, further reforming the pension system to curb the substantial increase in age-related expenditures and improving the efficiency of healthcare spending would contribute to reducing risks to the sustainability of public finances, which are currently at high level.

| 9. | The fiscal deficits and the pro-cyclicality of the fiscal policy in Romania can be mainly explained by a weak budgetary planning and execution. Initial budgets have suffered from an over-estimation of revenue and there have been several in-year budgetary rectifications, increasing current expenditure levels and shifting capital to current spending. Furthermore, there is a high degree of uncertainty as large expenditure outlays are operated in the last few months of the year. The primary current spending overruns coupled with a suboptimal composition of spending have put increasing strain on public resources and have reduced the scope for growth-enhancing capital spending.
  While the current spending overruns reflect the absence of a long-term strategy for public sector wages and pensions, the underperformance in terms of capital spending can be partly attributed to the weak administrative capacity to plan and execute public investment projects. To increase the predictability of public finances and the soundness of fiscal policy planning, the Romanian authorities have committed under the EU balance of payment assistance to adopt measures aimed at strengthening fiscal governance. These measures foresee the implementation of a binding medium-term budgetary framework, covering the general government and including binding budgetary rules on both revenue and expenditure and the establishment of an independent fiscal council. However, the convergence programme fails to specify concrete steps towards the implementation of the envisaged measures. In the area of tax administration, the convergence programme foresees the improvement in the efficiency of revenue collection through the reform of tax administration and a broadening of the tax base in sectors such as environment and agriculture. |
| --- | --- |

9.

The fiscal deficits and the pro-cyclicality of the fiscal policy in Romania can be mainly explained by a weak budgetary planning and execution. Initial budgets have suffered from an over-estimation of revenue and there have been several in-year budgetary rectifications, increasing current expenditure levels and shifting capital to current spending. Furthermore, there is a high degree of uncertainty as large expenditure outlays are operated in the last few months of the year. The primary current spending overruns coupled with a suboptimal composition of spending have put increasing strain on public resources and have reduced the scope for growth-enhancing capital spending.

While the current spending overruns reflect the absence of a long-term strategy for public sector wages and pensions, the underperformance in terms of capital spending can be partly attributed to the weak administrative capacity to plan and execute public investment projects. To increase the predictability of public finances and the soundness of fiscal policy planning, the Romanian authorities have committed under the EU balance of payment assistance to adopt measures aimed at strengthening fiscal governance. These measures foresee the implementation of a binding medium-term budgetary framework, covering the general government and including binding budgetary rules on both revenue and expenditure and the establishment of an independent fiscal council. However, the convergence programme fails to specify concrete steps towards the implementation of the envisaged measures. In the area of tax administration, the convergence programme foresees the improvement in the efficiency of revenue collection through the reform of tax administration and a broadening of the tax base in sectors such as environment and agriculture.

| 10. | In response to the financial crisis, the Romanian authorities have adopted several measures aimed at maintaining the stability of the banking sector and mitigating financial market pressures. Under the deposit guarantee scheme, the level of deposit guarantee coverage was increased from EUR 20 000 to EUR 50 000. To improve the access of SMEs to financing and support exports under the current juncture, the Romanian government decided an increase in the capital of two state-owned banks (CEC and EximBank) amounting to 0,2 % of GDP and the establishment of a SMEs credit counter guarantee scheme. Moreover, regulatory requirements for RON liabilities were eased, as the minimum reserve requirements for RON liabilities were reduced from 20 % to 18 %. Furthermore, under the EU balance of payment assistance, the Romanian authorities have committed to amend banking and winding-up laws to allow for a timely and effective response in cases of bank distress and to strengthen the remedial powers of the National Bank of Romania. |
| --- | --- |

10.

In response to the financial crisis, the Romanian authorities have adopted several measures aimed at maintaining the stability of the banking sector and mitigating financial market pressures. Under the deposit guarantee scheme, the level of deposit guarantee coverage was increased from EUR 20 000 to EUR 50 000. To improve the access of SMEs to financing and support exports under the current juncture, the Romanian government decided an increase in the capital of two state-owned banks (CEC and EximBank) amounting to 0,2 % of GDP and the establishment of a SMEs credit counter guarantee scheme. Moreover, regulatory requirements for RON liabilities were eased, as the minimum reserve requirements for RON liabilities were reduced from 20 % to 18 %. Furthermore, under the EU balance of payment assistance, the Romanian authorities have committed to amend banking and winding-up laws to allow for a timely and effective response in cases of bank distress and to strengthen the remedial powers of the National Bank of Romania.

| 11. | In line with the European Economic Recovery Plan adopted in December 2008 by the European Council and taking into account the absence of scope for fiscal manoeuvre, Romania has adopted only a limited number of fiscal stimulus measures, amounting to roughly 3⁄4 % of GDP in 2009, aimed at supporting household income, the corporate sector as well as labour markets. To support household income, the government decided to increase by 3 months the period for which unemployment benefits will be paid and to introduce a ‘minimum’ social pension for low-income pensioners. The measures for supporting the corporate sector include the non-taxation of reinvested profits, an extension of the car-scrapping scheme as well as the allocation of funds for export promotion. The labour market measures are mainly targeted towards supporting professional training for both unemployed and employees. Furthermore, within the budget envelope for 2009, the government aims at allocating a substantial part of spending to public investment to sustain recovery. In line with the policy areas covered in the country specific recommendations issued by the Council in the framework of the Lisbon strategy, the Romanian authorities have committed under the EU balance of payments assistance to implement structural reform measures for improving the efficiency and effectiveness of public administration, increasing the absorption of EU funds, improving the business environment and tackling undeclared work. |
| --- | --- |

11.

In line with the European Economic Recovery Plan adopted in December 2008 by the European Council and taking into account the absence of scope for fiscal manoeuvre, Romania has adopted only a limited number of fiscal stimulus measures, amounting to roughly 3⁄4 % of GDP in 2009, aimed at supporting household income, the corporate sector as well as labour markets. To support household income, the government decided to increase by 3 months the period for which unemployment benefits will be paid and to introduce a ‘minimum’ social pension for low-income pensioners. The measures for supporting the corporate sector include the non-taxation of reinvested profits, an extension of the car-scrapping scheme as well as the allocation of funds for export promotion. The labour market measures are mainly targeted towards supporting professional training for both unemployed and employees. Furthermore, within the budget envelope for 2009, the government aims at allocating a substantial part of spending to public investment to sustain recovery. In line with the policy areas covered in the country specific recommendations issued by the Council in the framework of the Lisbon strategy, the Romanian authorities have committed under the EU balance of payments assistance to implement structural reform measures for improving the efficiency and effectiveness of public administration, increasing the absorption of EU funds, improving the business environment and tackling undeclared work.

| 12. | Romania has adopted a budgetary consolidation programme in line with the aim of reducing external and internal imbalance and with the requirements under the EU financial assistance provided by the EU and other international lenders. According to the convergence programme, the fiscal stance as measured by the change in the structural balance using the commonly agreed methodology is estimated to be restrictive over the programme period. Considering the absence of room for fiscal manoeuvre and the need to correct economic imbalances, this appears appropriate. The update programme foresees a breach of the 3 % of GDP deficit reference value until 2011. The budgetary targets in the programme are consistent with the commitments made in the context of EU balance of payments assistance, although budgetary outcomes are subject to risks.
  However, the convergence programme does not reflect in a clear manner the commitments in terms of additional fiscal measures agreed under the balance of payments programme, notably with respect to the foregoing of public sector wage increases or equivalent further cuts in employment, and further reductions in subsidies to public entities. Furthermore, the updated programme does not reflect the commitments to reform key parameters of the pension system (e.g. indexation of public pensions and the retirement age), which is crucial for improving long-term sustainability of public finances. Finally, it does not provide sufficiently detailed information on the concrete measures and their budgetary impact, needed to achieve the deficit targets in 2010 and 2011. |
| --- | --- |

12.

Romania has adopted a budgetary consolidation programme in line with the aim of reducing external and internal imbalance and with the requirements under the EU financial assistance provided by the EU and other international lenders. According to the convergence programme, the fiscal stance as measured by the change in the structural balance using the commonly agreed methodology is estimated to be restrictive over the programme period. Considering the absence of room for fiscal manoeuvre and the need to correct economic imbalances, this appears appropriate. The update programme foresees a breach of the 3 % of GDP deficit reference value until 2011. The budgetary targets in the programme are consistent with the commitments made in the context of EU balance of payments assistance, although budgetary outcomes are subject to risks.

However, the convergence programme does not reflect in a clear manner the commitments in terms of additional fiscal measures agreed under the balance of payments programme, notably with respect to the foregoing of public sector wage increases or equivalent further cuts in employment, and further reductions in subsidies to public entities. Furthermore, the updated programme does not reflect the commitments to reform key parameters of the pension system (e.g. indexation of public pensions and the retirement age), which is crucial for improving long-term sustainability of public finances. Finally, it does not provide sufficiently detailed information on the concrete measures and their budgetary impact, needed to achieve the deficit targets in 2010 and 2011.

| 13. | As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme has some gaps in the required and optional data (3). |
| --- | --- |

13.

As regards the data requirements specified in the code of conduct for stability and convergence programmes, the programme has some gaps in the required and optional data (3).

The overall conclusion is that, while Romania is facing a severe economic downturn following years of above-potential economic growth, the restrictive fiscal stance envisaged between 2009 and 2011 is an adequate response, considering the absence of room for fiscal manoeuvre and the need to correct imbalances. In 2008, fiscal policy continued to be highly pro-cyclical, mostly due to a rapid expansion of the public wage bill and weak budgetary management. In line with the commitments made by Romania in the framework of the EU balance of payment assistance, the authorities envisage to undertake a significant fiscal consolidation effort starting in 2009, driven by expenditure reductions and targeting a deficit of below 3 % of GDP by 2011. Taking into account risks related to the macroeconomic scenario in 2009, to the effective implementation of the planned expenditure measures and the lack of information on concrete measures needed to underpin fiscal consolidation after 2009, the budgetary outcomes in the programme are subject to downside risks. Furthermore, measures are envisaged to address the weaknesses in budgetary planning and execution, among others through the implementation of a binding medium-term fiscal framework, the establishment of fiscal rules and of a fiscal council and by restructuring the public compensation system. However, the programme fails to specify concrete steps towards the implementation of the envisaged measures for improving fiscal governance.

In view of the above assessment and taking into account the recommendations addressed to Romania to correct the excessive deficit adopted by the Council on 7 July 2009 under Article 104(7) and the need to ensure sustainable convergence, and in line with the economic policy measures envisaged under the economic programme supported by Community balance-of-payments assistance, Romania is invited to:

| (i) | ensure the correction of the excessive deficit by 2011; to this effect implement the fiscal measures as planned in the February 2009 budget and the April 2009 amended budget, especially in the area of public sector wages and pension reform; take further corrective action if needed to achieve the 2009 deficit target in order to ensure compliance with the commitments undertaken under the programme supported by EC balance-of-payments assistance; and specify measures to underpin the envisaged reduction of the deficit in 2010 and 2011, in particular those underpinning the planned reduction of the public wage bill; |
| --- | --- |

(i)

ensure the correction of the excessive deficit by 2011; to this effect implement the fiscal measures as planned in the February 2009 budget and the April 2009 amended budget, especially in the area of public sector wages and pension reform; take further corrective action if needed to achieve the 2009 deficit target in order to ensure compliance with the commitments undertaken under the programme supported by EC balance-of-payments assistance; and specify measures to underpin the envisaged reduction of the deficit in 2010 and 2011, in particular those underpinning the planned reduction of the public wage bill;

| (ii) | undertake concrete steps towards the envisaged strengthening of fiscal governance and transparency, in particular by setting up a binding medium-term budgetary framework, establishing an independent fiscal council, introducing limits on budgetary revisions during the year and laying-out fiscal rules as well as restructuring the public compensation system, including pay and bonuses; in the area of tax administration, improve the efficiency of revenue collection through the reform of tax administration and a broadening of the tax base; |
| --- | --- |

(ii)

undertake concrete steps towards the envisaged strengthening of fiscal governance and transparency, in particular by setting up a binding medium-term budgetary framework, establishing an independent fiscal council, introducing limits on budgetary revisions during the year and laying-out fiscal rules as well as restructuring the public compensation system, including pay and bonuses; in the area of tax administration, improve the efficiency of revenue collection through the reform of tax administration and a broadening of the tax base;

| (iii) | accelerate the reform of the pension system (in particular with respect to the indexation of pensions and the retirement age) to curb the substantial increase in age-related expenditures and reduce the risks to the sustainability of public finances and improve the efficiency of healthcare spending; |
| --- | --- |

(iii)

accelerate the reform of the pension system (in particular with respect to the indexation of pensions and the retirement age) to curb the substantial increase in age-related expenditures and reduce the risks to the sustainability of public finances and improve the efficiency of healthcare spending;

| (iv) | strengthen the supply side of the economy by making tangible progress with the implementation of the structural reforms, notably by enhancing the efficiency and streamlining the public administration, improving the business environment, tackling undeclared work and by increasing the absorption and improving the use of EU funds. |
| --- | --- |

(iv)

strengthen the supply side of the economy by making tangible progress with the implementation of the structural reforms, notably by enhancing the efficiency and streamlining the public administration, improving the business environment, tackling undeclared work and by increasing the absorption and improving the use of EU funds.

Comparison of key macroeconomic and budgetary projections

| | | 2007 | 2008 | 2009 | 2010 | 2011 |
| --- | --- | --- | --- | --- | --- | --- |
| Real GDP (% change) | CP June 2009 | 6,2 | 7,1 | –4,0 | 0,1 | 2,4 |
| COM Spring 2009 | 6,2 | 7,1 | –4,0 | 0,0 | n.a. |
| CP Dec 2007 | 6,1 | 6,5 | 6,1 | 5,8 | n.a. |
| HICP inflation (%) | CP June 2009 | 4,5 | 7,9 | 5,8 | 3,5 | 3,2 |
| COM Spring 2009 | 4,9 | 7,9 | 5,8 | 3,5 | n.a. |
| CP Dec 2007 | 4,8 | 5,7 | 4,0 | 3,3 | n.a. |
| Output gap (4) (% of potential GDP) | CP June 2009 | 6,7 | 8,7 | 0,5 | –2,5 | –2,9 |
| COM Spring 2009 (5) | 6,6 | 8,5 | 0,2 | –3,0 | n.a. |
| CP Dec 2007 | 2,1 | 2,1 | 1,8 | 1,1 | n.a. |
| Net lending/borrowing vis-à-vis the rest of the world (% of GDP) | CP June 2009 | –12,9 | –11,9 | –6,3 | –5,4 | –5,2 |
| COM Spring 2009 | –12,8 | –11,8 | –6,4 | –5,1 | n.a. |
| CP Dec 2007 | –12,6 | –10,5 | –10,1 | –10,2 | n.a. |
| General government revenue (% of GDP) | CP June 2009 | 34,0 | 33,1 | 33,2 | 33,7 | 34,2 |
| COM Spring 2009 | 34,0 | 33,1 | 33,4 | 33,3 | n.a. |
| CP Dec 2007 | 37,4 | 39,8 | 39,9 | 40,8 | n.a. |
| General government expenditure (% of GDP) | CP June 2009 | 36,6 | 38,5 | 38,3 | 37,8 | 37,0 |
| COM Spring 2009 | 36,6 | 38,5 | 38,5 | 38,9 | n.a. |
| CP Dec 2007 | 40,3 | 42,7 | 42,8 | 43,2 | n.a. |
| General government balance (% of GDP) | CP June 2009 | –2,5 | –5,4 | –5,1 | –4,1 | –2,9 |
| COM Spring 2009 | –2,5 | –5,4 | –5,1 | –5,6 | n.a. |
| CP Dec 2007 | –2,9 | –2,9 | –2,9 | –2,4 | n.a. |
| Primary balance (% of GDP) | CP June 2009 | –1,8 | –4,7 | –3,6 | –2,4 | –1,4 |
| COM Spring 2009 | –1,8 | –4,7 | –3,6 | –4,0 | n.a. |
| CP Dec 2007 | –2,0 | –2,1 | –2,1 | –1,6 | n.a. |
| Cyclically-adjusted balance (4) (% of GDP) | CP June 2009 | –4,7 | –8,2 | –5,3 | –3,3 | –2,0 |
| COM Spring 2009 | –4,5 | –7,9 | –5,2 | –4,7 | n.a. |
| CP Dec 2007 | –3,6 | –3,6 | –3,5 | –2,8 | n.a. |
| Structural balance (6) (% of GDP) | CP June 2009 | –4,5 | –8,2 | –5,3 | –3,3 | –2,0 |
| COM Spring 2009 | –4,4 | –7,9 | –5,2 | –4,7 | n.a. |
| CP Dec 2007 | –3,4 | –3,4 | –3,4 | –2,7 | n.a. |
| Government gross debt (% of GDP) | CP June 2009 | 12,7 | 13,6 | 18,0 | 20,8 | 22,0 |
| COM Spring 2009 | 12,7 | 13,6 | 18,2 | 22,7 | n.a. |
| CP Dec 2007 | 11,9 | 13,6 | 14,2 | 14,9 | n.a. |
| Convergence programme (CP); Commission services’ Spring 2009 forecasts (COM); Commission services’ calculations. |

2007

2008

2009

2010

2011

Real GDP (% change)

CP June 2009

6,2

7,1

–4,0

0,1

2,4

COM Spring 2009

6,2

7,1

–4,0

0,0

n.a.

CP Dec 2007

6,1

6,5

6,1

5,8

n.a.

HICP inflation (%)

CP June 2009

4,5

7,9

5,8

3,5

3,2

COM Spring 2009

4,9

7,9

5,8

3,5

n.a.

CP Dec 2007

4,8

5,7

4,0

3,3

n.a.

Output gap (4) (% of potential GDP)

CP June 2009

6,7

8,7

0,5

–2,5

–2,9

COM Spring 2009 (5)

6,6

8,5

0,2

–3,0

n.a.

CP Dec 2007

2,1

2,1

1,8

1,1

n.a.

Net lending/borrowing vis-à-vis the rest of the world (% of GDP)

CP June 2009

–12,9

–11,9

–6,3

–5,4

–5,2

COM Spring 2009

–12,8

–11,8

–6,4

–5,1

n.a.

CP Dec 2007

–12,6

–10,5

–10,1

–10,2

n.a.

General government revenue (% of GDP)

CP June 2009

34,0

33,1

33,2

33,7

34,2

COM Spring 2009

34,0

33,1

33,4

33,3

n.a.

CP Dec 2007

37,4

39,8

39,9

40,8

n.a.

General government expenditure (% of GDP)

CP June 2009

36,6

38,5

38,3

37,8

37,0

COM Spring 2009

36,6

38,5

38,5

38,9

n.a.

CP Dec 2007

40,3

42,7

42,8

43,2

n.a.

General government balance (% of GDP)

CP June 2009

–2,5

–5,4

–5,1

–4,1

–2,9

COM Spring 2009

–2,5

–5,4

–5,1

–5,6

n.a.

CP Dec 2007

–2,9

–2,9

–2,9

–2,4

n.a.

Primary balance (% of GDP)

CP June 2009

–1,8

–4,7

–3,6

–2,4

–1,4

COM Spring 2009

–1,8

–4,7

–3,6

–4,0

n.a.

CP Dec 2007

–2,0

–2,1

–2,1

–1,6

n.a.

Cyclically-adjusted balance (4) (% of GDP)

CP June 2009

–4,7

–8,2

–5,3

–3,3

–2,0

COM Spring 2009

–4,5

–7,9

–5,2

–4,7

n.a.

CP Dec 2007

–3,6

–3,6

–3,5

–2,8

n.a.

Structural balance (6) (% of GDP)

CP June 2009

–4,5

–8,2

–5,3

–3,3

–2,0

COM Spring 2009

–4,4

–7,9

–5,2

–4,7

n.a.

CP Dec 2007

–3,4

–3,4

–3,4

–2,7

n.a.

Government gross debt (% of GDP)

CP June 2009

12,7

13,6

18,0

20,8

22,0

COM Spring 2009

12,7

13,6

18,2

22,7

n.a.

CP Dec 2007

11,9

13,6

14,2

14,9

n.a.

Convergence programme (CP); Commission services’ Spring 2009 forecasts (COM); Commission services’ calculations.

---

(1)  OJ L 209, 2.8.1997, p. 1. The documents referred to in this text can be found at the following website: http://ec.europa.eu/economy_finance/about/activities/sgp/main_en.htm

(2)  See Council Decision 2009/458/EC of 6 May 2009 granting mutual assistance for Romania and Council Decision 2009/459/EC of 6 May 2009 providing Community medium-term financial assistance for Romania.

(3)  In particular, the data on hours worked, general government expenditure by function and several items on long-term sustainability of public finances were missing.

(4)  Output gaps and cyclically-adjusted balances according to the programmes as recalculated by Commission services on the basis of the information in the programmes.

(5)  Based on estimated potential growth of 5,1 %, 5,2 %, 3,9 % and 3,2 % respectively in the period 2007-2010.

(6)  Cyclically-adjusted balance excluding one-off and other temporary measures. One-off and other temporary measures are 0,2 % of GDP in 2007 deficit-reducing and 0 % over the period 2008-2011 according to the most recent convergence programme and 0,2 % of GDP in 2007 deficit-reducing and 0 % over the period 2008-2010 according to the Commission services’ spring 2009 forecast.

Source:

Convergence programme (CP); Commission services’ Spring 2009 forecasts (COM); Commission services’ calculations.

---

II Information

INFORMATION FROM EUROPEAN UNION INSTITUTIONS AND BODIES

Commission

| 22.7.2009 | EN | Official Journal of the European Union | C 170/12 |
| --- | --- | --- | --- |

22.7.2009

EN

Official Journal of the European Union

C 170/12

---

Non-opposition to a notified concentration

(Case COMP/M.5522 — Mitsubishi Corporation/Acciona Energia Internacional/Amper)

(Text with EEA relevance)

2009/C 170/03

On 16 July 2009, the Commission decided not to oppose the above notified concentration and to declare it compatible with the common market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004. The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

| — | in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes, |
| --- | --- |

—

in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

| — | in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/en/index.htm) under document number 32009M5522. EUR-Lex is the on-line access to the European law. |
| --- | --- |

—

in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/en/index.htm) under document number 32009M5522. EUR-Lex is the on-line access to the European law.

---

| 22.7.2009 | EN | Official Journal of the European Union | C 170/12 |
| --- | --- | --- | --- |

22.7.2009

EN

Official Journal of the European Union

C 170/12

---

Non-opposition to a notified concentration

(Case COMP/M.5532 — Carphone Warehouse/Tiscali UK)

(Text with EEA relevance)

2009/C 170/04

On 29 June 2009, the Commission decided not to oppose the above notified concentration and to declare it compatible with the common market. This decision is based on Article 6(1)(b) of Council Regulation (EC) No 139/2004. The full text of the decision is available only in English and will be made public after it is cleared of any business secrets it may contain. It will be available:

| — | in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes, |
| --- | --- |

—

in the merger section of the Competition website of the Commission (http://ec.europa.eu/competition/mergers/cases/). This website provides various facilities to help locate individual merger decisions, including company, case number, date and sectoral indexes,

| — | in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/en/index.htm) under document number 32009M5532. EUR-Lex is the on-line access to the European law. |
| --- | --- |

—

in electronic form on the EUR-Lex website (http://eur-lex.europa.eu/en/index.htm) under document number 32009M5532. EUR-Lex is the on-line access to the European law.

---

IV Notices

NOTICES FROM EUROPEAN UNION INSTITUTIONS AND BODIES

Commission

| 22.7.2009 | EN | Official Journal of the European Union | C 170/13 |
| --- | --- | --- | --- |

22.7.2009

EN

Official Journal of the European Union

C 170/13

---

Euro exchange rates (1)

21 July 2009

2009/C 170/05

1 euro =

| | Currency | Exchange rate |
| --- | --- | --- |
| USD | US dollar | 1,4223 |
| JPY | Japanese yen | 134,10 |
| DKK | Danish krone | 7,4464 |
| GBP | Pound sterling | 0,86530 |
| SEK | Swedish krona | 10,8925 |
| CHF | Swiss franc | 1,5186 |
| ISK | Iceland króna | |
| NOK | Norwegian krone | 8,9515 |
| BGN | Bulgarian lev | 1,9558 |
| CZK | Czech koruna | 25,815 |
| EEK | Estonian kroon | 15,6466 |
| HUF | Hungarian forint | 271,30 |
| LTL | Lithuanian litas | 3,4528 |
| LVL | Latvian lats | 0,7005 |
| PLN | Polish zloty | 4,2525 |
| RON | Romanian leu | 4,2368 |
| TRY | Turkish lira | 2,1360 |
| AUD | Australian dollar | 1,7438 |
| CAD | Canadian dollar | 1,5689 |
| HKD | Hong Kong dollar | 11,0229 |
| NZD | New Zealand dollar | 2,1647 |
| SGD | Singapore dollar | 2,0491 |
| KRW | South Korean won | 1 774,19 |
| ZAR | South African rand | 11,1587 |
| CNY | Chinese yuan renminbi | 9,7153 |
| HRK | Croatian kuna | 7,3340 |
| IDR | Indonesian rupiah | 14 301,78 |
| MYR | Malaysian ringgit | 5,0378 |
| PHP | Philippine peso | 68,161 |
| RUB | Russian rouble | 44,1100 |
| THB | Thai baht | 48,351 |
| BRL | Brazilian real | 2,7010 |
| MXN | Mexican peso | 18,8597 |
| INR | Indian rupee | 68,8960 |

Currency

Exchange rate

USD

US dollar

1,4223

JPY

Japanese yen

134,10

DKK

Danish krone

7,4464

GBP

Pound sterling

0,86530

SEK

Swedish krona

10,8925

CHF

Swiss franc

1,5186

ISK

Iceland króna

NOK

Norwegian krone

8,9515

BGN

Bulgarian lev

1,9558

CZK

Czech koruna

25,815

EEK

Estonian kroon

15,6466

HUF

Hungarian forint

271,30

LTL

Lithuanian litas

3,4528

LVL

Latvian lats

0,7005

PLN

Polish zloty

4,2525

RON

Romanian leu

4,2368

TRY

Turkish lira

2,1360

AUD

Australian dollar

1,7438

CAD

Canadian dollar

1,5689

HKD

Hong Kong dollar

11,0229

NZD

New Zealand dollar

2,1647

SGD

Singapore dollar

2,0491

KRW

South Korean won

1 774,19

ZAR

South African rand

11,1587

CNY

Chinese yuan renminbi

9,7153

HRK

Croatian kuna

7,3340

IDR

Indonesian rupiah

14 301,78

MYR

Malaysian ringgit

5,0378

PHP

Philippine peso

68,161

RUB

Russian rouble

44,1100

THB

Thai baht

48,351

BRL

Brazilian real

2,7010

MXN

Mexican peso

18,8597

INR

Indian rupee

68,8960

---

(1)  Source: reference exchange rate published by the ECB.

---

NOTICES FROM MEMBER STATES

| 22.7.2009 | EN | Official Journal of the European Union | C 170/14 |
| --- | --- | --- | --- |

22.7.2009

EN

Official Journal of the European Union

C 170/14

---

Extract from the Decision concerning Kaupthing Bank Luxembourg S.A. pursuant to Directive 2001/24/EC of the European Parliament and of the Council of 4 April 2001 on the reorganisation and winding-up of credit institutions

2009/C 170/06

EXTENSION OF THE MISSIONS OF THE ADMINISTRATORS OF KAUPTHING BANK LUXEMBOURG S.A.

By judgment rendered on 22 June 2009, the Tribunal d’Arrondissement de et à Luxembourg, second chamber, (District Court) sitting in commercial matters, ruling in public audience, following the hearing in council chamber of the administrators, the representative of the société anonyme Kaupthing Bank Luxembourg S.A., the representatives of the Commission de Surveillance du Secteur Financier (‘CSSF’) and the representative of the Public Prosecutor, completes the judgments rendered by the Tribunal d’Arrondissement de et à Luxembourg on 9 and 31 October 2008, 2 April 2009, and the judgment rendered by the Cour d’appel de Luxembourg (Luxembourg Appeal Court) on 28 January 2009, as follows:

| ‘— | the administrators have the power to ascertain the realisation of the underlying conditions for the restructuring plan, |
| --- | --- |

‘—

the administrators have the power to ascertain the realisation of the underlying conditions for the restructuring plan,

| — | the administrators have the right to approve technical amendments to the agreements which are part of the restructuring plan and the Terms and Conditions of the notes or to correct obvious errors (erreurs manifestes) which are exclusively material, |
| --- | --- |

—

the administrators have the right to approve technical amendments to the agreements which are part of the restructuring plan and the Terms and Conditions of the notes or to correct obvious errors (erreurs manifestes) which are exclusively material,

| — | until the vote on the demerger of the Bank, the administrators have the right to finalise the negotiations on the legal structure of the SPV KI Securities which have not yet been finalised in the submitted restructuring plan, particularly as to the allocation of the rights and obligations under the SPV KI Securities to one of the two companies that will result from the demerger of the Bank, |
| --- | --- |

—

until the vote on the demerger of the Bank, the administrators have the right to finalise the negotiations on the legal structure of the SPV KI Securities which have not yet been finalised in the submitted restructuring plan, particularly as to the allocation of the rights and obligations under the SPV KI Securities to one of the two companies that will result from the demerger of the Bank,

| — | once homologated by the Court the restructuring plan shall only benefit to the Bank, and any pledgors, guarantors and third parties having granted security of any type in favour of the restructured creditors in relation to all or any part of its restructured debt cannot take advantage of the restructuring plan, appoints as escrow agent PricewaterhouseCoopers société à responsabilité limitée, represented by Mrs. Emmanuelle CARUEL-HENNIAUX, and Maître Franz FAYOT, with the mission to open an account with a bank in Luxembourg, on a fiduciary basis, on which the funds from the State and the AGDL will be wired, and determine the modalities of the functioning of the above mentioned account with the State and the AGDL; ascertains the suspension of payments regime will be lifted by the approval of the demerger of the Bank by its shareholders resulting in the dissolution without winding-up of the Bank.’ |
| --- | --- |

—

once homologated by the Court the restructuring plan shall only benefit to the Bank, and any pledgors, guarantors and third parties having granted security of any type in favour of the restructured creditors in relation to all or any part of its restructured debt cannot take advantage of the restructuring plan, appoints as escrow agent PricewaterhouseCoopers société à responsabilité limitée, represented by Mrs. Emmanuelle CARUEL-HENNIAUX, and Maître Franz FAYOT, with the mission to open an account with a bank in Luxembourg, on a fiduciary basis, on which the funds from the State and the AGDL will be wired, and determine the modalities of the functioning of the above mentioned account with the State and the AGDL; ascertains the suspension of payments regime will be lifted by the approval of the demerger of the Bank by its shareholders resulting in the dissolution without winding-up of the Bank.’

No application may be brought by any of the parties or by any third party to set aside the judgment.

The Administrators

PricewaterhouseCoopers S.à.r.l. represented by Mrs Emmanuelle Caruel-Henniaux, and Me Franz Fayot

---

V Announcements

PROCEDURES RELATING TO THE IMPLEMENTATION OF THE COMPETITION POLICY

Commission

| 22.7.2009 | EN | Official Journal of the European Union | C 170/15 |
| --- | --- | --- | --- |

22.7.2009

EN

Official Journal of the European Union

C 170/15

---

Prior notification of a concentration

(Case COMP/M.5590 — 3i Group/H.I.G. Capital/Volnay B.V.)

Candidate case for simplified procedure

(Text with EEA relevance)

2009/C 170/07

| 1. | On 13 July 2009, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertaking 3i Group plc (‘3i Group’, United Kingdom) and the undertakings H.I.G Europe Capital Partners, L.P. and Bayside Debt & LBO Fund II, L.P. belonging to the H.I.G. Capital group of funds (‘H.I.G. Capital’, United States of America) acquire within the meaning of Article 3(1)(b) of the Council Regulation joint control of the undertaking Volnay B.V. (Netherlands) by way of purchase of shares. |
| --- | --- |

1.

On 13 July 2009, the Commission received a notification of a proposed concentration pursuant to Article 4 of Council Regulation (EC) No 139/2004 (1) by which the undertaking 3i Group plc (‘3i Group’, United Kingdom) and the undertakings H.I.G Europe Capital Partners, L.P. and Bayside Debt & LBO Fund II, L.P. belonging to the H.I.G. Capital group of funds (‘H.I.G. Capital’, United States of America) acquire within the meaning of Article 3(1)(b) of the Council Regulation joint control of the undertaking Volnay B.V. (Netherlands) by way of purchase of shares.

| 2. | The business activities of the undertakings concerned are:






  — | for 3i Group: private equity and venture capital firm, |
| --- | --- | --- |

2.

The business activities of the undertakings concerned are:

—

for 3i Group: private equity and venture capital firm,

| — | for H.I.G. Capital: private equity investment firm, |
| --- | --- |

—

for H.I.G. Capital: private equity investment firm,

| — | for Volnay B.V.: magazine publishing and provision of advertising space in the Netherlands. |
| --- | --- |

—

for Volnay B.V.: magazine publishing and provision of advertising space in the Netherlands.

| 3. | On preliminary examination, the Commission finds that the notified transaction could fall within the scope of Regulation (EC) No 139/2004. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice. |
| --- | --- |

3.

On preliminary examination, the Commission finds that the notified transaction could fall within the scope of Regulation (EC) No 139/2004. However, the final decision on this point is reserved. Pursuant to the Commission Notice on a simplified procedure for treatment of certain concentrations under Council Regulation (EC) No 139/2004 (2) it should be noted that this case is a candidate for treatment under the procedure set out in the Notice.

| 4. | The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.
  Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (+32 2 2964301 or 2967244) or by post, under reference number COMP/M.5590 — 3i Group/H.I.G. Capital/Volnay B.V., to the following address:





  European Commission |
| --- | --- |
| Directorate-General for Competition |
| Merger Registry |
| J-70 |
| 1049 Bruxelles/Brussel |
| BELGIQUE/BELGIË |

4.

The Commission invites interested third parties to submit their possible observations on the proposed operation to the Commission.

Observations must reach the Commission not later than 10 days following the date of this publication. Observations can be sent to the Commission by fax (+32 2 2964301 or 2967244) or by post, under reference number COMP/M.5590 — 3i Group/H.I.G. Capital/Volnay B.V., to the following address:

European Commission

Directorate-General for Competition

Merger Registry

J-70

1049 Bruxelles/Brussel

BELGIQUE/BELGIË

---

(1)  OJ L 24, 29.1.2004, p. 1.

(2)  OJ C 56, 5.3.2005, p. 32.

---