The European Bank for Reconstruction and Development (EBRD), one of Romania's main lenders, has adopted a new strategy for the Romanian market, stipulating support for accelerated investments, industrial sector restructuring and increased weight of the private sector in the economy.
EBRD will focus on restructuring the large enterprises, developing the private sector, infrastructure rehabilitation and consolidation of the financial sector and the SMEs.
As for infrastructure, the financial institution will aim mainly at regional and municipal environment protection projects and increasing the weight of the private sector.
According to the strategy authors, success is linked to the Romanian investment climate and the Government's determination to speed up reforms.
"Romania is making progress and has a very high potential, but there is still a lot to be done to improve living conditions and the economic climate," said EBRD president Jean Lemierre.
According to EBRD, the high inflation rate reflects the salary raises that harm productivity in the public sector and the lax monetary and budget policies. Moreover, the privatisation pace for large state-owned enterprises and the level of direct foreign investments per capita remain small.
The Executive will be facing several difficulties during this process, as it will have to improve the investment climate, provide a transparent and safe environment for private investors, draft a viable project for incentive granting and educating the public sector in the accounting field.
Moreover, the Bucharest Government will have to gradually cut state subsidies granted mainly in the energy sector and optimise tax collection for the public services.
The private sector is still undercapitalised, as SME access to short-term financing is confined by high interest rates and the banking system inefficiency.
At the end of last year, only 17% of the total credits granted in Romania in the domestic currency went to non-government economic agents, with the loans due in the medium- and long-term.
The European Commission report released last year said that Romania must fight corruption and focus on institutional responsibilities and functions, while EBRD notices that those bodies that should apply the legal framework for creating a free market economy are either too weak or inexistent.
"Frequent modification of regulations and their arbitrary interpretation by the officials stimulate corruption," the European institution shows, warning against the property right breaching.
EBRD praises certain progress that was made in the legal field, but says there are other sectors where changes are insufficient: monitoring of financial services, cross-border banking transfers, direct taxing and information protection.
EBRD financial support for the next two years will aim at modernising and privatising large enterprises in the oil and natural gas sector and in metallurgy, with the help of strategic investors and through pre-privatisation restructuring operations. Mediafax
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