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April 21, 2021

Use of emergency ordinances creates uncertainty, scares investors, stalls growth

According to Hoyt Yee U.S. Deputy Assistant Secretary of State for Europe and Eurasia, attending an event in Bucharest, Romania has adopted a series of laws without prior comprehensive impact assessment.

Foreign investors continue to draw attention to the fact that the political decisions seriously affect the economic area. More specifically, the use of the emergency ordinances creates uncertainty, scares the investors interested of Romania and stalls economic growth.
“A key principle of a transparent and predictable business climate is that when the Government considers new regulations and new rules, it should first evaluate the possible impact on the players, by consulting them included. In business, the same as in governing, surprises can be costly. Sudden changes of the rules of the game may serious damage some businesses, while they may favour others by creating unequal conditions, which serious businesses try to avoid.” said Hoyt Yee U.S. Deputy Assistant Secretary of State for Europe and Eurasia, at Bucharest in a seminar on ‘Promotion of Strategic Economic and Commercial Partnership,’ organized by the U.S. Embassy, the U.S. Chamber of Commerce in Romania and the Romanian-American Business Council, in partnership with Romania’s Government.
The U.S. Deputy Assistant Secretary of State for Europe and Eurasia told also that Romania has adopted a series of laws without prior comprehensive impact assessment and gave the example of the Audiovisual Law. Hoyt argued that the said law has a market-distorting effect and that it offers an advantage to large institutions when negotiating with advertisers, whereas small firms are affected.
‘Such discriminatory measures may contribute to the way corruption is perceived and it can reduce competitiveness. Consultations and better impact assessments can help improve Romania’s results in fighting corruption, which recorded a decline in the anti-corruption index of Transparency International from 66-69,’ Hoyt Yee said.
Study impact of potential economy regulations before implementing
In his turn, U.S. Secretary of Commerce Penny Pritzker said in a video message that it is ‘imperative’ the leaders of Romania should study the impact of the potential regulations on the economy and businesses before implementing them. She stressed that governance will thus be ‘more efficient’ and the companies would find it ‘easier’ to enter the Romanian market. The U.S. secretary said that from the meeting she had with Romanian Prime Minister Victor Ponta in Washington almost a year ago there resulted ‘the urgent need’ of a strategy of Romania regarding the improvement of the business climate. The plan worked out by Romania in this respect is a sign of ‘significant progress’, she said, while also pointing out that the true measure of the Romanian authorities’ success will be the plan implementation.
The effective implementation of this plan will open the door to new businesses and will increase our bilateral commercial activity, will strengthen our economies and will bring mutual prosperity, Secretary Pritzker said.
USD 3 bn to be spent in public investments by year-end
Romania must spend more than 3 billion dollars in public investments by year-end, Prime Minister Victor Ponta said attending the event, adding this is difficult to achieve as long as the procedures take a long time and are frequently challenged.
‘I think 2 percent of GDP that we must further spend as public investment by year-end means a huge lot: more than USD 3 billion  for certain and this capital invested in the economy will mirror on the entire development. I think the Government and the business circles should particularly be concerned with the causes for which the public investments, the investment for which there is money from the budget, are so difficult to make. It is about long procedures, it is about a Romanian habit of challenging – there is not even a single procedure not to be challenged – it is about shunning responsibility by those who must take such procedures to the very end; I think that close cooperation of the businesses with the partner governments, aimed at learning from their experience would help us better use the money that we have for investments, which we are not spending for bureaucratic procedural reasons’, said Ponta.
He stressed that the drop of the public deficit to 0.2 percent of GDP is not ‘too good news’ for the Romanian economy, given the dire need of investments.
‘We have pursued an otherwise correct track: to cut the public deficit every year, to strive towards the European structural deficit targets. But I think this year we have gone towards this goal a bit too fast. After seven months of 2014, Romania has a public budget deficit at 0.2 percent of GDP. Normally, for a powerful consolidated economy, it would be good news. For an economy such as Romania’s, which needs investments, I do not think this is too good news’, Ponta stressed.
Attending the event hosted by the Palace of Parliament were also the Speaker of the Deputies’ Chamber Valeriu Zgonea, U.S. Charge d’Affaires in Bucharest Dean Thompson.

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