Business leaders ask for long-term strategy

Leaders of the governing coalition yesterday met to discuss measures to counter the economic crisis drafted by the Social Democratic Party, part of the government. The Cabinet already passed two anti-crisis plans, but the Social Democrats, former political enemies of their current coalition partner, the Liberal-Democratic Party, came up with new measures to revive Romania’s economy. Among them are lower value added tax (VAT) for certain food products, tax exemption for reinvested profit, and foregoing the lump-sum tax, a controversial step made earlier this year in order to boost state budget revenues.

Deputy Prime Minister Dan Nica said that these measures could be included in the Fiscal Code after they are analyzed by a specialized commission. The Fiscal Code is to be changed and parties, businesspeople associations and experts are coming up with their proposals, asked that they are introduced in the fiscal legislation.

After yesterday’s meeting, coalition leaders decided that Economy Minister Adriean Videanu and Small and Medium-Sized Enterprises Minister Constantin Niţă must find a way to include part of Social Democrats’ measures in the government program.

Businesspeople are not optimistic about Romania’s economic rebound and criticize the government for applying few or none of the measure needed to counter the economic crisis. Some of them, such as the former CEO of Rompetrol oil company, Dinu Patriciu, and the owner of International Railway Systems, Cristian Burci, paint a grim picture of the country’s macroeconomic indicators and foresee gross domestic product (GDP) drop of 7-10 percent. „I believe that Romania is in a much worse situation than the rest of the Europe, because the authorities took none of the measures that should have been taken. We did not cut costs fast enough, we did not establish and meet an accurate investment plan,”, Burci said.

“I do not know what is actually happening with the ruling parties, I only know that, economically, something must be done as soon as possible. Otherwise, there will be a disaster, as of September-October. We do not need various outlooks, belonging to each ruling party, what we need is a unitary vision. It does not matter who does it, what it matters is what and how it is done, and it must be done quickly,” the owner of Interagro, a major player in agriculture, Ioan Niculae, said.

The Managing Partner of the Scot&Company advisory firm, Dan Schwartz, told Business Standard that the anti-crisis measures proposed by the ruling parties are strictly political, and the proposals sound well on paper, but “I do not believe that an assessment has been made of the impact on the state budget and the business environment, before they were announced.” For example, “not taxing reinvested profit, although a good measure in theory, will not have a significant impact on the business environment, considering that this year’s profits will be very low or inexistent,” Schwartz added. “The business environment needs stability and a long-term strategy from the authorities, that would give companies confidence so that these can make their own development strategies,” Dumitru Becşenescu, owner of the Antares Group, said.