Romania's new Prime Minister Florin Citu announced on Jan. 15 that the government wants to repeal Law 173/2020 regarding the alienation of state-owned shares in national companies, corporations, banks and any other companies in which the state has the quality of shareholder.
"This is not about alienating shares, is it about attracting capital in Romania. This is what we are doing, we are capitalizing these companies. We don't have the resources to capitalize on all these companies and cover their investment and growth needs...What we are doing by repealing the law does not necessarily mean that as of tomorrow we will begin to sell. No, it is a signal we send to the capital market, to foreign investors that in Romania private property is sacred, firstly, and secondly, that we are not a country that does not want investors to come,” Citu explained, in an interview with Bucharest-based Radio Guerrilla.
In June 2020, the Romanian Chamber of Deputies passed Law 173/2020, drafted by Social Democratic Party (PSD) MPs, regarding some measures for the protection of national interests in economic activity. This law, which freezes the sale of stakes in state-owned companies for two years, came amid fears that, taking advantage of the economic crisis caused by the Covid-19, certain economic players could try to buy cheap strategic national companies which are in a distressed financial situation. The law was approved in a 100 - 89 vote with 3 abstentions.
“For a period of two years, any operations regarding the alienation of the state-owned shares in the national companies and societies, as well as in the companies in which the state has the quality of shareholder, started before the entry into force of this law, shall be suspended. The provisions do not apply to post-privatization operations and operations specific to privatization in case the transfer of ownership over the state-owned participations has taken place” the Law reads.
Romania's biggest investment fund Fondul Proprietatea-which holds minority stakes in state-owned transport and energy firms- and the Bucharest Stock Exchange (BVB) had argued in June that the law would hold back the development of Romania's capital market and jeopardise the country's economic recovery.
The association of CFA analysts and the Association of Financial-Banking Analysts in Romania (AAFBR) also criticised the bill.
Marcel Ciolacu, the leader of PSD (Partidul Social Democrat), currently the main opposition party, in a post on Facebook wrote that Citu wants to sell “for nothing” the strongest and most profitable state-owned companies, adding that the Social Democrats will oppose the attempt, “with all our might.”
“Romania must act in the same way as the other European states – Germany, France, Poland, Hungary, countries that protect their strategic companies in this period of crisis caused by the pandemic,” Ciolacu added.
Who is right and who is wrong? What is fair for Romania?