FIC: Romania’s long term economic growth is impossible without infrastructure investment

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Romania’s infrastructure has reached such a state that it acts as a drawback for economic growth, our country ranking last in the European Union as far as the quality of the infrastructure is concerned, reads a press release of the Foreign Investment Council (FIC) issued on Wednesday.

“Romania’s transport infrastructure has developed extremely slowly in the last decades, due to a plurality of factors such as: the lack of a priority list, the discontinuity of the public policies’ decisions and the weak coordination in completing the undertaken projects. Statistical data uphold this conclusion. Romania is rapidly approaching, if not already there, the point in which the current infrastructure will act as a stumbling block to the economic growth,” foreign investors say.

According to them, in order to reach the level of the western countries’ standard of living, Romania needs at least two decades of strong economic growth above the European average. Without immediate solid investment in infrastructure, the current economic growth will be impossible to maintain in the medium and long term.

According to the 2016-2017 Global Competitiveness Report, Romania ranks 88th of 139 countries with regard to the quality of infrastructure, down two positions as compared to the 2015-2016 rankings. Moreover, Romania’s 2017 Country Report, devised by the European Commission, underscores that in the last decade, Romania has recorded the highest public investment rate in the EU and overall, improvement has been registered. Despite this aspect, Romania still ranks last in the EU as regards the perception on the quality of the infrastructure.

According to FIC, authorities should take into account the mapping out of clearly defined objectives. At present, the priorities for the following 3-5 years are not clear, neither is the financing means or how the infrastructure projects will be implemented, the foreign investors warn.

The National Road Investments Company (CNIR) needs an appropriate framework of corporate governance so as to ensure quality management. At the same time, this entity should fall under Law no. 111/2016 on corporate governance. Meanwhile, the purpose and objectives of CNIR need clarifications, and also the designation of a unit in charge with project management, especially that the lack of professional management and expertise have led many times to delays in projects without compelling reasons.

Furthermore, there is the need to clearly define criteria and investment priorities of The Sovereign Development and Investment Fund (FSDI) that the Government is establishing, as well as to create a coherent framework for a new law of public-private partnership, an aspect that the previous forms of the law did not comprise.