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Capital Markets

Fondul Proprietatea’s chief warns of ‘lost year’ for Romania

Political instability could delay the long-awaited revival of Romania’s stalled privatization programme, as hopes for early elections fade.

Ludovic-Orban-Romania-PM-R-780.jpg

Romania's prime minister Ludovic Orban



Romania’s economy faces “another lost year” with little progress on key reforms if attempts to bring parliamentary elections forward are unsuccessful, warned the head of listed local investment fund Fondul Proprietatea.

“We badly need a fully mandated government that can take the actions necessary to repair the damage caused by the previous government,” says Johan Meyer, CEO of Franklin Templeton Romania, which manages the fund.

Romanian politics have been in flux since October, when a coalition led by the populist Social Democratic Party (PSD) was ousted by a no-confidence vote after less than three years in power.

'Greed taxes'

The PSD government had angered investors and local businesses with a series of populist economic policies, including a radical package of sectoral “greed taxes” and energy price caps – known as ordinance 114 – that was introduced at the end of 2018.

Repeated attempts to reverse improvements in corporate governance at state-owned enterprises (SOEs), implemented at the behest of the IMF and European Commission after Romania’s bailout in 2009, were also condemned by reformers.

A new coalition government led by the National Liberal Party (PNL) was formed in November under the leadership of prime minister Ludovic Orban and promptly began dismantling the PSD’s legacy.




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