The Sovereign Investment Fund proposed by the Simion Plan, difficult to implement in the current economic conditions

The creation of a Sovereign Investment Fund in Romania (SIFIR), which would be capitalized from the collection of royalties and taxes for the exploitation of mineral and energy resources, as well as from the dividends of state-owned energy companies, is one of the long-term projects proposed both in The Simion Plan, as well as in the governing program of the Alliance for the Union of Romanians (AUR). The idea is not new. Such a fund wanted to be established in our country by Liviu Dragnea, at the time when he was president of the PSD and, although the social-democratic government approved in 2018 a normative act for the establishment of the Sovereign Investment Fund, the law was no longer implemented because of the many criticisms he faced during that period.

Now in the Simion Plan and in the governance program of the AUR it is claimed that, by capitalizing on natural resources and through responsible administration, the FSIR, which would be created on the model of the Norwegian Sovereign Wealth Fund, will be able to ensure a stable source of income to cover budget deficits and will contribute to the economic development of the country.

However, economic specialists state that the current economic conditions in our country do not allow the establishment of such a fund and show that, if the fund will be administered through political interventions, it will not be a viable one, but will fail due to incompetence that led to bankruptcy many of the state companies.

In response, AUR representatives state that the respective fund will be a transparent one with professional management and that, in addition to the Norwegian fund model, there is also the model of the Polish Sovereign Investment Fund, which could be easily implemented in our country.

• The structure and operation of the sovereign wealth fund

According to the Simion Plan, Romania's Sovereign Investment Fund should be responsible for managing the country's natural resources, placing the collected sums in low-risk investments outside the country and covering the pension fund deficit from the earnings obtained. In addition, the fund would support investments in key areas of national interest, such as energy, steel and metallurgy.

The AUR program states that this fund will be organized in the form of a state fund, which can be capitalized from Romanian taxpayers' money, allowing them to become shareholders. The Romanian state will retain the majority stake in companies in strategic fields and those that process natural resources, thus ensuring national control over these vital resources. Also, Romanian citizens will have easy access and right of pre-emption to buy shares in these companies. This approach will allow the direct involvement of the population in the management of national resources, increasing transparency and accountability in the administration of the fund.

In the opinion of AUR leaders, an important aspect for the viability of this fund is the gradual recovery of majority stakes in strategic companies, such as OMV-Petrom, through fair compensations, after verifying the fulfillment of contractual obligations. This initiative will ensure the return of control over national resources to the hands of the state and Romanian citizens, protecting them from uncontrolled sale or exploitation.

The Simion Plan shows that the financing of the FSIR will be achieved through a well-defined mechanism that will ensure a constant source of income. The four main sources of funding proposed are:

1. Direction to the FSIR of royalties and exploitation and licensing fees for companies that exploit hydrocarbons, mineral resources and operate in the field of electricity production.

2. A share (50%) of the dividends paid to the Romanian state by the companies in which he is a shareholder, such as Hidroelectrica, Transgaz, Nuclearelectrica, RomGaz and others.

3. Issuance of corporate bonds, to attract additional funds.

4. Own income from placements and investments made by the FSIR once it becomes operational.

The AUR leader estimates that from the first two sources, FSIR could benefit from approximately 1.5 billion euros annually, money that would otherwise have gone directly to the state budget. These resources would allow the fund to start its activity and become an strong long-term investment fund.

• Political-Legislative Aspects

The AUR leaders state that from a political-legislative perspective, the establishment of the Romanian Sovereign Investment Fund is not a complicated process, because similar mechanisms already exist at the level of the Romanian state, such as the famous financial investment companies (former SIFs). They state that the only thing missing at the moment is the national political will to lead to the establishment of such a fund, very important for the national economy and for the development of the country.

They claim that, once this fund is established and operationalized - for which an appropriate normative framework must be created, the FSIR will have as its main objective the exploitation of natural resources in the interest of Romanians and ensuring prosperity for future generations. The Simion Plan mentions that the Sovereign Investment Fund is not only an economic proposal, but also a strategic necessity to ensure Romania's future.