ECONOMY

Romania urged to speed up reforms in EBRD report

LONDON (Reuters) – Romania needs to accelerate reforms to improve its poor performance in privatization and attracting foreign investment, the European Bank for Reconstruction and Development (EBRD) said in a report. The EBRD, the development bank for Eastern Europe and the former Soviet Union, said in its strategy paper for Romania published yesterday that there still were signs of hope. One reason for optimism was the privatization of large firms like steelmaker Sidex which was due to be signed today, though much more needed to be done. Given the worsening of the global economic and geo-political climate, the government’s commitment to tackle these challenges is of critical importance for the future of Romania, the EBRD said. Despite having a low level of external debt as a proportion of the economy compared with other countries from Eastern Europe, the EBRD said that Romania was more dependent than most countries on external financing and was more vulnerable to changes in investor confidence. Romanian foreign direct investment, a crucial source of long-term finance, remained low at $300 per capita between 1989 and 2000, compared with an average for Central and Eastern Europe and the Baltic States of $1,154 per capita. The country has huge financing needs, estimated at 10 billion euros ($8.9 billion) alone to bring water standards to the European Union average, and this will require Romania to promote non-sovereign finance through involving the private sector. The EBRD is participating in the privatization of bankrupt steelmaker Sidex, which is Romania’s largest company through a 100 million euro loan for working capital. The successful privatization of Sidex could signal a crucial turning point for the future industrial development of Romania, said Noreen Doyle, First Vice President at the EBRD. The development bank said it would accelerate lending and investment in Romania and had a pipeline of 900 million euros in projects. To date the EBRD has committed 1.8 billion euros to projects in Romania.