Sovereign Investment Fund
The Chamber of Deputies has adopted the draft law on setting up Romanias Sovereign Development and Investment Fund.
Roxana Vasile, 07.06.2018, 14:09
On Wednesday Romania’s Chamber of Deputies, as a decision-making forum, adopted the draft law on setting up the Sovereign Development and Investment Fund. The fund is to receive from the state minority or majority stakes in 33 companies, as well as 9 billion lei in cash, the equivalent of some 2 billion Euros, to be disbursed in the next five years. The list of companies includes resounding names such as Electrica, RomGaz, Nuclear Electrica, OMV Petrom, Antibiotice, CFR- The Romanian Railway Company and Poşta Română- the Romanian Post.
The Sovereign Fund’s activity and the way in which it fulfils its objectives will be assessed every year by the Finance Ministry, and the results will be forwarded to the Government. Representatives of the Social Democratic Party and of the Alliance of Liberals and Democrats, in the ruling coalition, have said the Fund gives Romania a chance to develop through investments. According to the Social-Democratic leader Liviu Dragnea the project is one of the pillars of the governing program, the more so as such Funds are functioning successfully the world over:
Liviu Dragnea: “Similar investment funds are functioning in many countries in Europe, in many countries of the world, and they have helped those countries’ economies. It is a Fund which will contribute to developing Romania’s big infrastructure, to Romania’s re-industrialization process, it will help investments in agriculture, will generate many jobs and will contribute significantly to increasing the gross domestic product.”
In another move, the right-of-centre opposition accuses it of undermining the national economy. An MP of the Save Romania Union, Cosette Chichirău, claims the Sovereign Development and Investment Fund does not have an economic but a political purpose:
Cosette Chichirău: “You need liquidities right away to pay electoral handouts, but the budget does no longer allow you to do that. Consequently, you want to create an instrument to indebt yourselves, without including this debt into the public debt. You stretched your arm further than your sleeve will reach and now you have to sell profitable shares to pay for electoral insanity. The Romanian state is being stripped of all its possessions, in all domains.”
A superstructure or a company above other companies, the Fund, in its first years, before getting consolidated, should not make so-called non-productive investments, even though useful, says economic analyst Constantin Rudniţchi. In other words, why should a hospital or a highway be built with money from the Fund and not from the state budget or with European funds?
Constantin Rudniţchi: “The logic behind such a Fund is that it should make profitable investments, to bring in money. It becomes a strong Fund on the market, it is traded on solid international markets, thus attracting new investors, bringing much more capital to the Fund, from outside, that is not from the companies which are part of the Fund. It is this money that the Fund should invest, investments that are usually made with money from the budget.”
Given that the right-of-centre opposition will contest the constitutionality of the draft law setting up the Sovereign Development and Investment Fund, the bill will be sent to president Klaus Iohannis for promulgation only after the Constitutional Court issues its verdict.
