By Andrei Skvarsky
Renaissance Capital analysts say Romania has seriously improved its business climate and has made “an impressive recovery” from the global financial crisis.
“We think the upside for the country is clear,” equity research analyst Omair Ansari says in a piece entitled “Romania: impressive frontier opportunity” and written after a week-long visit to Romania, adding that the Eastern European country still has some challenges to deal with.
Romania “has undergone a distinct change in how it conducts business and politics,” Ansari says. “The country has made an impressive recovery from an economic perspective, with inflation at just under 3% in 2013 and a GDP growth rate of over 3%, which stands out vs its European peers.”
The analyst cites the Romanian government’s representative for strategic economic projects as arguing that GDP growth of 5% for the next decade is feasible.
The International Monetary Fund sees privatisation as a priority for the country, but “the recent IPO of Electrica shows that this is happening”, the analyst says. Electrica is one of Romania’s key electricity providers.
Romania is also in earnest about combating corruption, an endemic disease of the post-communist world. “More than 1,000 people were convicted of corruption last year,” Ansari says, citing Reuters. “The current president’s brother was arrested on corruption charges during our visit.”
However, there remain problems to be solved. Fiscal arrears, though declining, remain an issue, the country has high financing needs – 10% of GDP, – and its external debt/GDP ratio is 70%, the analyst says, citing the IMF.
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