News 29 Dec 11

Romanian State Companies to Donate 85% of Profit

In a controversial move, the Romanian government has ordered state companies to transfer most of their 2012 profits to the state budget.

Marian Chiriac
BIRN
Bucharest

The cash-strapped government has decided that state-run companies must transfer 85 per cent of their profits to the state budget next year. The move is opposed by most potential investors.

A similar provision was ordered in 2011.

The government has approved a memorandum that will lower the percentage of state-owned firms' profit that must be transferred to the state budget from the current 90 per cent, according to media reports.

Analysts say the move is against the government's stated policy which aims to attract foreign investments in order to reform the country’s state companies.

“The government is taking a serious risk with foreign investors if it goes ahead with this measure, as such decisions could cause investors to lose confidence in the Romanian government’s willingness to honor its bond and debt obligations,” says economic analyst Ilie Sorbanescu.

Franklin Templeton Investments, the US-based manager of investment fund Fondul Proprietatea, went to court earlier this year against the shareholders of state-run gas company Romgaz. The company had approved a €94 million donation to the Romanian state from the company’s profits.

The state is the majority shareholder of Romgaz, while Fondul Proprietatea owns 15 per cent of the company.

Shareholders approved the donation despite public opposition from Templeton.

Romania has a growing need for cash, and is largely dependent on foreign investment to fill holes in its state budget.

The government plans to sell minority stakes in energy, transportation and chemical companies next year as part of a larger plan to raise money under the terms of a €20 billion International Monetary Fund, IMF, bailout loan.

Talk about it!

blog comments powered by Disqus

Related Headlines:

macedonia-decides-to-hold-elections-on-december-11-08-31-2016
01 Sep 16

Macedonian Election Set for December

The leaders of Macedonia’s four main political parties agree to hold the twice-postponed general election on December 11, after reaching a deal on forming an interim government.

31 Aug 16

A Balkan Quarrel in a Donald Trump Style

31 Aug 16

Zagreb Mayor Plays for Premiership Prize

31 Aug 16

Tourism in Bulgaria Set For Record Summer

Premium Selection

divided-west-leaves-bosnia-s-governor-exposed-08-31-2016
31 Aug 16

Divided West Leaves Bosnia's ‘Governor’ Exposed

The Office of the High Representative has suffered a major blow after the international community declined to support it against the Bosnian Serb referendum - which may have dire implications.

zagreb-mayor-plays-for-premiership-prize-08-30-2016
31 Aug 16

Zagreb Mayor Plays for Premiership Prize

Zagreb’s longstanding mayor Milan Bandic is conducting a vigorous campaign to win the prime minister’s post at Croatia’s elections - even though his own political party is tiny.

31 Aug 16

Pro-Govt Media Keeps Right-Wing Serbs Onside

29 Aug 16

Hidden Treasures of Belgrade’s Kalemegdan

26 Aug 16

Belgrade’s Ancient Crafts Guardians

Latest News from the Balkans

01 Sep 16

Macedonian Election Set for December

31 Aug 16

Tourism in Bulgaria Set For Record Summer