Key privatizations for Romania

BUCHAREST – Romania’s chances of joining the European Union in 2007 hinge on this year’s drive to privatize an array of troubled state firms within a gloomy world economic outlook, officials and analysts said yesterday. The Balkan country has been slow to sell state-owned companies, with successive post-communist governments trapped between the need for economic efficiency and the fear of alienating voters used to the security of state sector jobs. «Since Romania wants to join the EU in 2007, the current year becomes a critical one, in which substantial progress needs to be achieved,» Ziad Alahdad, World Bank Country Manager and Chief of Office for Romania told Reuters. EU Enlargement Commissioner Guenter Verheugen said on a visit to Bucharest in February that essential reforms of the economy, judiciary and public administration were needed if the 2007 target was to be met. «That all must be accelerated to lead to concrete results this year,» he said. Under accords with international lenders, Romania pledged it would sell its biggest bank, Banca Comerciala Romana (BCR), the national oil company SNP Petrom, electricity and gas distributors and other big companies this year. «Given the state of some of the markets, the efforts would need to be enhanced even further to achieve the targets,» Alahdad added. Romania has pledged to shed 19,000 jobs in 22 debt-ridden state companies in the first half of the year to make them more attractive, but analysts say even that may not be enough. «Maybe they will sell one or two of them,» economic analyst and former Reform Minister Ilie Serbanescu said. «But the rest must be closed or we’ll be paying for the losses.» Most jobs will be axed at truck maker Roman Brasov and tractor maker Tractorul Brasov, with around 3,000 layoffs each, and at troubled steel mills Resita and Siderurgica Hundedoara with about 4,000 workers to go. Debts of the 22 companies to the state and to suppliers total 18 trillion lei ($531.2 million). There is no overall figure for the total losses, but Privatization Minister Ovidiu Musetescu has said Tractorul Brasov loses two billion lei per day and its debts total 2.6 trillion lei. He told a recent news conference the 8,000 employees at Roman Brasov, also in the central Romanian town of Brasov, produced 600 trucks last year. For it to be profitable, 4,000 people should be making 3,000 trucks per year. An International Monetary Fund (IMF) board meeting in Washington later this month is expected to decide whether to release a next tranche of a $396 million stand-by accord with Romania which expires in August. «In privatization, Romania has taken two steps forward, one step back,» Carlin Doyle, an analyst with Oxford Economic Forecasting said. «If the IMF releases the next tranche, it means Romania is on the right path.» He said sell-offs must be done before the country enters next year’s national election period. «Next year, the government will have their mind on getting reelected,» Doyle said. «The opportunity is now, they’d be foolish not to take it.»