Government to create Sovereign Investment Fund
Romanian Government creates legal framework to set up Sovereign Development and Investment Fund.
Mihai Pelin, 16.11.2018, 12:42
The Bucharest Government has passed an emergency decree setting up the Sovereign Development and Investment Fund, aimed at developing and starting businesses that are profitable for the Romanian state. Thus, the authorities plan to create instruments for financial investment or financial mediation of shares or stakes in profitable projects or companies, a segment that the Romanian financial market does not cover. These mechanisms should, on the one hand, have a multiplier effect in economy, for sustainable development, and on the other hand should catalyse or mobilise the available financial resources towards the real sector and profitable projects.
The Funds purpose is not privatisation, Finance Minister Eugen Teodorovici has explained. He has given assurances that the Fund will have a decisive contribution to Romanias economic development by providing an alternative source of funding important investment in infrastructure, industry and the capital market. Eugen Teodorovici details the type of funding available through the newly created fund:
“Financing enterprises at various stages of development, start-ups included, financing Romanian companies of strategic importance and following the energy strategy, investing in industry and infrastructure projects, increasing the competitiveness of the Romanian economy, stimulating innovation and new technologies, creating jobs in a sustainable manner, developing the human and social capital in the long run, and last but not least, developing capital markets.”
Minister Teodorovici has also said that the Fund will be organised as a Romanian shareholder company, with the organisation and functioning rules to be established at a later date, through another government decree. The state will have two representatives in the Funds board, out of a total of nine. Stipulated in the 2017-2020 governing programme and drawing on the experience of states such as France, Norway, Poland and Italy, the Sovereign Fund will mainly comprise profitable Romanian state-owned companies and will have a capital of some 2 billion euros. The Romanian minister has also said that these companies can be listed and sold on the Stock Exchange Market to the amount of 51%.
Parliament initially passed a law on the setting up of the Sovereign Fund, which was later declared unconstitutional in the Constitutional Court that ruled that such fund cannot be set up by adopting a law in Parliament, but only through a Governments decree. On November 10 the Finance Ministry put up for public debate the framework project for the setting up of the Sovereign Fund and invoked an extraordinary situation that needed to be urgently regulated, thus requiring its immediate adoption through government decree.
