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Lazea (BNR): Romania ranks third in EU according to investment share in GDP

Romania ranks third in EU according to the share of investments in GDP, while needs are unlimited and should be handled according to priorities, as mayoralties cannot have 'schools and bridges and dispensaries and roads and stadiums' says senior BNR economist Valentin Lazea.

'It is very important to understand that Romania is among the first in Europe for the GDP share of expenses with investments, but we would need more than 100% of GDP for the 40,000 projects opened today. A mayoralty cannot have at the same time schools and bridges and dispensary and roads and stadiums as they all opened in the last 20 years. What is happening in some places at central level should be applied at all levels. And then we have this paradox, investments expenses as GDP percentage among the highest in Europe and unlimited needs at the same time,' Lazea said at a press conference organized by the Foreign Investors' Council (CIS).

He showed that applying priorities in investments is necessary also because of the fact that it is requested by the European Commission within the European semester.'You know that Romania must send its national reform program and the convergence program every spring. It is a priority making exercise which could help the authorities to complete certain projects,' the economist said.

On the other hand, Lazea pointed to the need of making people aware of important regional differences in Romania.

'We should be aware of the fact that Romania is second as regional differences after Great Britain. This program says nothing about Moldova. It seems that in Romania people are not suffereing from regional differences and this can be seen, as we rank 26th of 27 states,' the BNR economist said.Asked about doubling foreign investments in the first two months of the year, Lazea mentioned the figure was a good thing but it is not relevant since the period is too short to draw any conclusions and we should refer to the fact that last year was very poor and there is not basic effect.

At the same time Lazea said that investors' quality is more important than the quantity of foreign investments.'There is a quantity figure. There was talk about 25 billion euro in the next 5-6 years. That seems plausible as it has attracted about 50 billion euro until now. But the quality of investors which Romania or any other country attracts, depending on macroeconomic and institutional conditions , seems more important than quantity,' the economist continued.He mentioned that in Romania macroeconomic conditions would have to observe criteria of nominal convergence.

'In case we do not have inflation relaxation – maybe many foreign investors hope that – as well as foreign and domestic deficits, public debt and so on, not only because we are now part of the euro plus package and the IMF accord, but also because the stock market would severely penalize any slip away,' Lazea explained.He pointed out that Romania's country risk had improved significantly of late.

'Macroeconomic conditions are half of the guarantee that we will attract foreign investors of a certain quality. We may say it openly that there are foreign investors who feel good if macroeconomic conditions are relaxed and shaky, there are others who like institutional conditions at the border of legality, but we are not talking about them but about the serious ones. International studies have pointed out that serious foreign investors are looking for four aspects: labour force flexibility, infrastructure, functioning of justice and depth of financial market,' Lazea showed.

The BNR senior economist showed that the government 'has done a lot' to make labour market flexible and things began to move in the infrastructure sector. Direct foreign investments in Romania have grown two times in the first two months of the year, to 294 million euro, as against 140 million euro in the same period of 2010, according to BNR data. CIS has developed points from 1 to 5 with which it measured the practicability of projects, while Nadlac-Sibiu highway obtained the highest score of 4.6. The investment is estimated at 3-4 billion euro, with 580 million euro from budget costs, the rest representing EU co-financing. This project will lead to a 3.6 GDP increase on an average term, which will also create 74,000 new jobs.Bucharest-Brasov highway obtained 3.3 points, followed by the continuation of infrastructure projects requested by Ford, such as the development of Craiova-Bucharest road and railway infrastructure and Constanta port, as well as Tarnita-Lapusesti hydropower plant.

Top 5 of Investment Priorities suggested by CIS is completed by the pan-European project Extreme Light Infrastructure (ELI), 'which might get Romania back on the global map of research.' According to CIS, the project could attract overall investments of 1 billion euro in the next 7 years and Magurele could become a reference technological center and might attract additional investments such as a back-up center and the development of advanced medical units. A part of costs could be covered from European funds.

The CIS report shows that the first five investment priorities could have an impact of 9.5 points in the growth of GDP in the next five years and may lead to the creation of 189,000 jobs. The overall investments calculated by CIS could rise to 10 billion euro, of which only 2.4 billion euro from budget expenses. At the same time these projects would bring additional incomes of 3.6 billion euro.

Sursa: http://www.actmedia.eu

Tags: romania billion about euro could investors infrastructure conditions which projects investment according bnr share investments lazea economist foreign

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