***FLASH REPORT***

The National Bank of Romania, Ministry of Finance and Ministry of Commerce have recently issued Instructions to be followed for the remittance into Romania of foreign currency received from the export of goods and services. These Instructions could seriously impact all entities involved in the export of goods and services and all banks.

In early 1994 the Government issued Ordinance no 18/1994, which imposes penalties for nonrepatriation of foreign currency by exporters of goods or services. The declared aim of this Ordinance was the "consolidation of the financial discipline and of the foreign currency regime". Instructions were issued in March 1994 and the Ordinance was approved by Parliament in February 1995 (Law 12).

Until now, the application of this Law has not been strictly enforced. However, it appears that authorities are now serious with their intention to control the repatriation of foreign currency. The recently issued Instructions, effective 9 November 1995, replace the March 1994 Instructions and are more draconian in the application of penalties. It would appear that the banks will be required to ensure that the provisions of Ordinance 18 and of the Instructions just issued are observed by exporters.

According to Ordinance 18, exporters of goods and services must receive the foreign currency in respect of exports, through bank accounts opened with banks authorised to operate in Romania. In addition, the Instructions stipulate that the documents for receiving foreign currency in respect of exports, must be sent to the foreign clients through banks authorised to operate in Romania. Note that there is no sanction stipulated for failure to follow this procedure, so it may not be necessary, at least for exports of services.

In relation to the terms for settlement repatriation, in case of payments on sight, repatriation of the foreign currency must be done within maximum 90 days from the date when the goods crossed the border or the services have been provided, depending on the geographical zone where the foreign client is located.

In case of payments on credit terms, the repatriation of the foreign currency must be done within 15 days from the due date established in the contract.

The following penalties are applicable in case of nonobservance of the above-mentioned terms:

  • 10% of the amount not received, in case of delays not exceeding 30 days;
  • 15% of the amount not received, in case of delays between 30 and 60 days;
  • 20% of the amount not received, for each month exceeding the first 60 days of delay.

In case a delay has been established by a control body (of the Ministry of Finance), the foreign currency must be repatriated within 30 days from the date of the control, otherwise the penalties mentioned above would be increased by 50%.

The penalties are to be paid in ROL. The total amount of the penalties would not exceed, however, an amount in ROL corresponding to the foreign currency not repatriated.

Exporters are exempted from the payment of the above-mentioned penalties, in the following cases (these must be authenticated with appropriate documents):

  • amounts in dispute (legal proceedings started or which are to be started);
  • claims of the foreign client, related to quantity or quality of the goods/services delivered/provided;
  • components and spare parts for exported goods within the guarantee period;
  • goods delivered in consignment;
  • temporary exports;
  • samples;
  • goods sent back by the foreign clients, due to defects;
  • force majeure circumstances.

Banks are required to check the observance of these provisions and inform the Ministry of Finance and the National Bank of Romania of any such contraventions. The Ministry of Finance then is to establish the contraventions and to apply the sanctions/penalties. Banks are potentially penalised if they do not inform the Ministry of Finance and the National Bank.

For detailed information please contact:

Ron Barden or Anca Troaca-Dragoman
Price Waterhouse Romania
Union International Center
11 Campineanu Street
Sector 1, Bucharest
Romania

Tel No.: 40-1-311-2455
Fax No.: 40-1-312-3334

Disclaimer

The above information represents a brief summary of the legislation mentioned therein and is not intended to be advice on any particular matter. Price Waterhouse expressly disclaims any liability towards any person in respect of any action or omission in reliance of the contents of this publication.

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