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EBRD adopts new strategy for Romania
In its latest strategy for Romania, the EBRD says the country has achieved macroeconomic stability in recent years but still faces significant challenges, especially in improving the investment climate, pushing forward privatisations and undertaking structural reforms. It is the first strategy for Romania issued under the Bank’s new Public Information Policy, with the public invited to comment ahead of publication, and will for the first time be available in the Romanian language.
The paper, issued today on the Bank’s website, www.ebrd.com, analyses the country’s progress in political and economic transition and outlines its priorities in Romania over the next two years. Priority areas will be private-sector development, infrastructure projects, institution building, and policy dialogue with the authorities to help improve the investment climate.
Despite recent worsening global economic conditions, Romania’s macroeconomic performance has been favourable in the past two years, with growth exceeding 5 per cent on average since 2001. Olivier Descamps, Business Group Director for southern and eastern Europe at the EBRD, said a combination of factors – including low wages, increased productivity, competitiveness, location and ambitions to join the European Union – have contributed to Romania’s success. Mr Descamps added that the EBRD’s recent equity stake in Banca Commerciala Romana is a strong indication of the authority’s commitment to reform but cautioned that a poor investment climate, weak judiciary system and administrative barriers remain major obstacles to private-sector development and attracting investment.
To help speed up reforms and address some of the challenges facing Romania, the EBRD’s latest strategy will specifically support:
• Private-sector development, especially by promoting pre-privatisation investment – as with with BCR, for example – and support for privatisations across the country. An ongoing priority will also be support for micro enterprises and entrepreneurs, especially through credit lines offered via local banks. The Bank will also continue to place emphasis on supporting non-bank financial institutions, including development of the pension sector, private insurance markets, leasing and mortgage financing.
• Infrastructure development, especially for energy efficiency and energy projects, by supporting, for example, the privatisation of SNP Petrom, as well as electricity and gas distribution companies. The EBRD will also continue to support the development of municipalities, especially within the wastewater sector, and explore opportunities to support the transport sector through non-sovereign-guaranteed loans. The Bank is also ready to support the National Administration of Roads to help restructure its activities and strengthen its capabilities to work with the private sector.
• The corporate sector, by supporting the rapidly growing retail sector and helping to identify and finance local food-processing companies. The Bank will pay special attention to agribusiness by supporting financial schemes, especially through risk-sharing facilities or commodity-based financing, which will promote the development of the Romanian agriculture sector.
• Co-financing and pre-EU-accession funds. The Bank will continue to be a major catalyst in mobilising co-financing, both commercial and official. The syndication of finance to both foreign and local commercial banks will therefore be strongly sought, as will co-financing opportunities with other international financial institutions and EU programmes to address, among other things, the environmental or social components of projects.
The EBRD is the largest investor in Romania, with nearly €2.4 billion committed to projects across the country. Working with its many partners, the Bank has mobilised more than €7.5 billion for projects across Romania.
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