Home Page
 
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:

bosnia-croatia-feud-risks-spiralling-out-of-control-09-25-2017
25 Sep 17

Bosnia-Croatia Feud Risks Spiralling out of Control

An already ugly diplomatic war between Croatia and Bosnia could get a lot worse following an upcoming war-crimes verdict.

25 Sep 17

465 Children Exhumed from Bosnia War Graves

25 Sep 17

Hungary Changes Tack on Romania's OECD Bid

25 Sep 17

Serbia's Economic Slowdown Alarms Experts

Premium Selection

serbia-s-economic-slowdown-alarms-experts-09-22-2017
25 Sep 17

Serbia's Economic Slowdown Alarms Experts

Serbia’s economic growth has slowed down this year, statistics show – and independent experts dispute official claims that this is mainly due to recent bad weather. 

bosnia-s-bone-hospital-still-haunts-its-inmates-09-22-2017
25 Sep 17

Bosnia’s ‘Bone Hospital’ Still Haunts its Inmates

The destruction of a memorial to Bosniaks imprisoned at the Kostana Hospital detention camp in Stolac during wartime brought back disturbing memories of the torture they endured there.

18 Sep 17

Wine Lovers’ Paradise in Vibrant Zupa Region