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Romania: President Calls Economic Forum 'Successful Promotion'

  • Ron Synovitz



Prague, 24 March 1997 (RFE/RL) -- Romanian President Emil Constantinescu says a three-day economic conference in Bucharest has helped his country promote what he calls "a new type of relation between Romania and the Western business world."

Constantinescu made the comments at yesterday's closing session of the Crans Montana Forum in Bucharest -- an event that attracted hundreds of Western business executives and representatives from international financial institutions.

Romanian Prime Minister Victor Ciorbea told foreign bankers and business leaders at the conference that his government plans to revise as many as 80 laws by early May to promote foreign investment. He said foreigners will be allowed to own property in Romania and that the transfer of profits out of the country would be simplified. He also said that some Western businesses would get tax exemptions.

Since taking office late last year, Ciorbea already has lifted price controls on bread, fuel and meat. His government also has allowed the currency's exchange rate to be set by market demand. Despite an initial surge in prices for both domestic and foreign goods, Ciorbea said public support for economic reforms is still high. He noted polls that say 70 percent of Romanian voters continue to support reforms despite their high social costs.

Romanian Industry and Trade Minister Liviu Marcu also stressed that Romania wants to attract foreign investment. He said foreign companies must be invited to build and operate power plants, underground natural gas storage facilities and new highways. He said telephone and pipeline companies are similarly in desperate need of foreign investment.

Marcu said Romania's oil and gas industries are among "the most unprofitable" energy firms in the world. He said lifting the price controls on oil and gas is only the first step toward making the sector profitable.

In addition, Marcu said, an integrated Romanian oil company must be created by the end of this year that offers shares of ownership and operates like a private company. He said an important part of the transition is to bring in managers and create a board of directors that makes decisions based on economic principles rather than social concerns.

The World Bank and International Monetary Fund (IMF) have urged such changes in all reforming Eastern European countries. They say that businesses must operate with the goal of generating profits, while governments should create social programs to address social concerns -- such as pensioners -- inability to afford heat or food on their fixed incomes.

In the past, Romania has used cheap oil and gas to subsidize loss-making state industries and keep employment levels high. Marcu said this is a practice that must end if the transformation to a market economy is to be successful.

Romania's Finance Ministry announced at the conference that the government plans to begin public auctions of government Treasury bills beginning in May. The state secretary for the ministry, Mircea Costea, said the plan calls for the central bank to initially issue three-month treasury bills. He said treasury bills with longer maturities would be gradually introduced.

Currently, short-term government debt securities are sold directly to a few Romanian banks. Foreign banks and investors are not allowed to buy them. But Costea said a system of primary dealers is planned and that an auction system for government securities would be created by May. He said a secondary market also would be developed.

Western financial correspondents at the conference report that investors there expressed strong interest in the government securities.

Other topics featured at the conference included restructuring efforts in Romania's mining, agriculture, telecommunications, tourism, banking and transport sectors. Our correspondent in Bucharest says members of the Romanian government attended most of the sessions.

Ion Bogdan Lefter, RFE/RL's Romanian Service Bucharest Bureau Chief, also contributed to this report.
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