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Romania and Bulgaria are reluctant to privatise inefficent companies for fear of lay-offs

Romania and Bulgaria are reluctant to privatise inefficient companies who swallow state funds worth hundreds of million euros for fear they would be followed by massive lay-offs.

The Bulgarian company Toplofikatsia Sofia became a well-known example of funds embezzlement, after his head was fired in 2006, following the discovery that he used the money of the supplier to install massage seats and jacuzzin in his office as well as for ordering French cheese.

Toplofikatsia accummulated after 2007 losses of 60 million euro and debts of 270 million euro.

Bulgaria and Romania whose economies contracted by 5% and 7% respectively in 2009, they need funds and foreign investments to cover budgetary deficit and gaps against neighbouring countries. Previous privatisation led to increase of unemployment, and the present governments are reluctant to sell state-owned companies. Keeping such companies will cost both countries almost 0.8% of GDP under the form of subsidies, only in 2011, according to Reuters. In Bulgaria, debts and guaranteed loans are worth over one billion euro.

According to IMF, the state-owned companies in Romania cost the state 5% of GDP, almost 6.5 billion euro, under the form of debts. « To block privatisation and concessions leads to losses for the companies and the state budget and leads to no proper conditions for investment » Blenika Dzhelepova, analyst at the Centre for Economic Development in Bulgaria said.

Bulgaria got last year 25 million leva ( 17.5 million dollars) out of privatisation, against the target of 200 million leva and the analysts anticipate new dealys of the programme. Such companies as BDZ ( railroad company) gets high subsidies,but its debts are 270 million euro.

In Romania the last big privatisation was the public bid initiated by Transgaz in 2007. The Romania state needs funds to cover the budgetary deficit, and IMF pressurises for the sale of participations to state-owned companies, especially in the domain of energy and transport, Reuters says.

The plan includes participations with Petrom, Transelectrica, Transgaz and Romgaz which have been postponed for several years.

« Privatisation represents a matter of will, it depends on the attitude of the government » Daniel Hewitt said, analysts with Barclays Capital. In a separate analysis by Reuters there is presented the fact that Bulgaria's and Romania's economies will remain behind the other states in Central Europe due to corruption, bureaucracy and the effects of real estate drop. Other factors to stop the two countries from recovering the economic divide are lack of reforms, infrastructure and specialised work force.

Sursa: http://www.actmedia.eu

Tags: companies euro privatisation million state reluctant romania bulgaria

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