The crisis has restricted the ability of Bucharest"s mayoralty to secure funding for its projects

ALINA TOMA VEREHA

The financial crisis has unavoidably hit the operations of Bucharest"s mayoralty, first of all by causing a downsizing of the 2009 budget, which is smaller, in real terms, than 2008"s budget. Moreover, as opposed to the previous years, the mayoralty"s access to international funding has been cut off completely, mayor Sorin Oprescu yesterday said, during the Central and South Eastern European Financial Forum. "This means we find ourselves unable to secure the funding needed for several projects. As the chief-economist of the National Bank proved, the lowering of the sovereign risk rating by agencies such as Fitch or Standard & Poor"s, has affected the rating of Bucharest"s mayoralty as well".

According to the mayor, the current situation could improve by H1 2010, at best, when rating agencies may raise our ratings enough to for us to reach investment grade status again. Sorin Oprescu emphasized that the only financial institutions willing to lend money to Bucharest"s mayoralty are the European Union, through its various structural funds programs, the World Bank, the EBRD and the EIB. "Local banks have significantly reduced their exposure lately, compared to the previous years", he added.

According to a press release sent to our editors, Bucharest"s mayoralty has its own anti-crisis strategy. It will soon launch shadow toll schemes for the projects which have failed to secure funding. Since the crisis can bring about opportunities as well, such as lowering home prices, among other things, the mayoralty wants to seize the opportunity to make acquisitions accomplish its social programs with lower costs.

Sorin Oprescu also said: "Keeping with the opportunity theme I am hoping that the government as well as the banking system will keep their promise of predominantly funding infrastructure projects. Bucharest needs to build new access roads, and to expand its current ones, as well as overpasses and aboveground and underground parking lots, which would require sizeable investments".

In closing, mayor Oprescu called for bankers to fund the public sector, if they find the private sector is too risky right now. He said that, in his opinion Bucharest"s mayoralty can offer many low risk opportunities for medium and long term investments.

Mayor Oprescu called for bankers to fund the public sector if they find the private sector is too risky right now.