financing. With support from the administration, legislation has
been introduced in both houses of the Congress of the United States to
accord Romania most-favored-nation treatment. Sources in the United
States, however, believe that Romania will not be able to balance its
trade with that country even in the event that the proposed legislation
is enacted into law.

Imports have been overwhelmingly weighted in favor of capital goods.
Machinery and equipment, fuels, and raw and processed materials
constituted about 90 percent of all imports in the 1960s. Manufactured
consumer goods accounted for from 5 to 7 percent of imports. Raw and
processed food products made up the small balance. Machinery and
equipment, including plant installations, were the major single import
category; the share of machinery and equipment in total imports rose
from about 33 percent in 1960 to 49 percent in 1967 but declined to 44
percent in 1969 because of payments difficulties. Imported machinery and
equipment covered about 30 percent of requirements in 1970.

Exports in the 1960s consisted mainly of raw and processed materials and
foodstuffs, about equally divided between products of agricultural and
industrial origin. As a result of progressive industrialization, the
proportion of these products in total exports declined from about 78
percent in 1960 to 63 percent in 1969. During the same period the share
of machinery and equipment rose from about 17 to 22 percent, and that of
manufactured consumer goods increased from about 6 to 16 percent.
Official foreign trade policy is directed toward increasing the
proportion of processed goods in total exports.

In the 1960-70 period the annual balance of trade was negative, with the
exception of the years 1960 and 1965. The cumulative trade deficit at
the end of 1970 amounted to about 5.1 billion lei--the equivalent of
about US$850 million. The overall deficit, however, obscured the
severity of the foreign exchange problem facing the country. Trade with
the communist and developing countries during the period produced an
export surplus that offset, in part, the deficit with Western trading
partners. This surplus, however, could not be used to reduce foreign
indebtedness because it did not generate hard currency earnings. The
cumulative hard currency trade deficit with the West reached US$1.2
billion in 1969 and an estimated US$1.5 billion in 1970.

Information on the country's balance of payments h