Foreign investors" solutions for boosting Romania"s economy

The representatives of the Council of Foreign Investors (CIS) claim that Romania"s GDP could grow almost 12% by 2015, if it were to implement the economic recovery plan proposed by the former.

Dominic Bruynseels, a member of the Board of the CIS and CEO of BCR, said that apart from the growth of the GDP, direct foreign investments would reach a minimum of 25 billion Euros, in the 2011-2015 period, and consumer confidence would increase considerably in the next five years. Another objective of the "Program for Economic Growth" launched by the CIS is to help Romania rise from the 30th to the 25th spot in Europe by 2015, in terms of competitiveness. The program would also help reduce unemployment from 7.4% to 5%, and the budget deficit would drop to 3%, from its current level of 8.3%.

According to CIS officials, the factor that could "boost" the Romanian economy would be structural funds, for which the absorption rate has been very slow so far. It is estimated that the implementation of the new economic recovery program could lead to the absorption of 10-13 billion Euros until 2015.

If the proposed plan gets implemented, the IMF may consider a deviation from the target it has set for the Government, said Mariana Gheorghe, the president of the CIS and CEO of "Petrom". She said that "if there will be a clearly defined infrastructure program, which can inspire confidence to the IMF, there is a chance that it may accept a deviation from the assumed target. We are not in favor of changing the agreed targets, but even changes to rigid objectives can happen".

Foreign investors are willing to offer expertise, management resources and to entertain a permanent dialog with the representatives of the state, as well as provide funding, through the investments they plan to make in Romania, in order to support the implementation of the measures proposed by the CIS, said Mariana Gheorghe. She said that in the coming years, the 15 companies which are members on the board of the Council plan to invest 10 billion Euros in Romania, "which represents more than 10% of the current GDP". The investments made by the 118 members of the CIS over the last 20 years, amount to 30 billion Euros, which exceeds 60% of the total investments in Romania. The companies had a total turnover of 36 billion Euros in 2009, and a profit of 2 billion Euros.

The economic recovery plan of the Council includes 80 measures, with 10 major areas of interest - the stabilization of the macroeconomic environment, the implementation of improved governance, the support of the development of small and medium enterprises, supporting investments in the Romanian economy, accessing EU funding, the development of the infrastructure that a modern economy needs, the exploitation of Romania"s agricultural potential, the implementation of fiscal policies that stimulate growth, the reformation of the legal system and the modernization of the public sector. The board of the CIS has drawn up a list containing the 12 most relevant and urgent measures, which can lead to economic growth on the short term.

According to Mariana Gheorghe, the members of the council have already had several meetings with the representatives of the presidency and of the parliament, as well as with officials of the NBR and of the IMF, and they will constantly keep in touch with the institutions of the state, in order to implement the economic recovery plan.

• The state should keep a public list of its debts

One of the main measures proposed by the CIS is for the state to keep the list of its outstanding debts public, to allow banks to see the financial state of companies that have claims on the state, and which are applying for loans. Claudia Pendred, a member on the Board of the CIS and EBRD"s Director for Romania, said that this will encourage banks to lend. The target of this measure is to see companies borrow up to 500 million Euros, the creation of 19,000 jobs and a 0.9% increase of the GDP.

Another suggestion would be an implementation of the "First Home 3" program, as well as a program for subsidizing small and medium enterprises, by creating a 50 million Euros fund, which would help the economy generate 250 million Euros.

• Foreign investors propose assisting the government

Since the government "makes unpredictable decisions, as most of the time it issues emergency ordinances", the CIS is proposing the creation of a council, which would include teachers, researchers and representatives of the public and private sector, which would provide assistance and help design healthy economic policies, by guaranteeing the country would be managed more efficiently.

This Council for Economic Development would concern itself with macroeconomics, currency, finance, public finance and welfare, industry, commerce, the labor market, legislation, economy and globalization.

• We need to host the European Football Championship

Infrastructure is one of the weakest points that Romania has. According to the members of the CIS, among other things, in this sector, Romania needs a master-plan created by a private company, as well as medium and long term strategies. It should also host the European Football Championship of 2020. By that time, Romania would have the road infrastructure it needs, as well as a modern tourist infrastructure, which would attract numerous visitors. Claudio Zito, the president of "Enel" Romania, said that if Romania were to organize the championship in association with Hungary or Bulgaria, its GDP would increase by 1% for each billion Euro invested in infrastructure.

• We need a ten year agricultural strategy

In the agricultural sector, the first proposal made by the CIS was the setting of a deadline by which the contracted structural funds would need to be used, since most of them remain unused. The creation of an irrigation system is also needed, and farming land would need to be merged together. Jean Valvis, the president of "Valvis Holding", says that Romania needs a ten year agricultural strategy: "The political terms are last only four years and no one bothers to look further".

The other areas that would help a recovery of the economy include rethinking the fiscal policy, the reformation of the legal system and the flexibility of legislation in the labor sector.