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| CRISIS MANAGEMENT PLANS AND THE ROLE OF THE COUNTRY RATING 13/11/2008 |
| (2008-11-13) |
| Last updated: 2008-11-14 16:41 EET |
Wednesday is the day when the “crisis officially hit Romania”, write the papers in Bucharest following an announcement by the minority government of a plan to prevent the effects of the world recession. The government promised to disburse 10 billion euros from the budget over the next 4 years. Bucharest would thus join some of the world's biggest economic powers who, whether in Berlin or Washington, took similar measures and allocated public funds to support the private sector whose bankruptcy would have devastating social consequences.
A day earlier, trade unions explicitly called for the state's intervention and for more investment in infrastructure which would automatically generate more jobs and would reinvigorate each industrial sector as part of a chain reaction. The measures proposed by the government are aimed precisely at generating more jobs. Companies are to receive 1,000 euros for each new job they create for people who have been unemployed for at least 3 months. Big investors willing to invest at least 100 million euros and create more than 500 jobs will receive up to 50 million euros worth of aid from the state budget. In the fiscal area, the cabinet promises to reduce social insurance contributions by 10%, to grant a 5% fiscal bonus to companies that pay their taxes on time and exempt them from paying tax on reinvested dividends.
The government plan also entails measures dedicated to the banking sector. The share capital of the Savings Bank, the only state owned bank in Romania, will be increased by 250 million euros in order to support small and medium sized companies and farmers, while Eximbank will support the small and medium sized companies dealing in exports. Prime Minister Calin Popescu Tariceanu “fills in the agenda of the future cabinet”, writes the daily Evenimentul Zilei ironically, referring to the fact that the term of the Liberal prime minister expires after the legislative elections later this month, while opposition parties describe the plan as “election propaganda” and “naive”.
The Ziua also notes that the “economy no longer seems to be working like a clock”, as the Prime Minister once said. “After years of being inflated like a balloon, the Romanian economy, hit by the shock waves of the world crisis, is starting to burst.” The car industry, the textile industry and the heavy industry are the first to see the consequences of this crisis: every day you hear about factories being closed down, collective redundancies and downsizing of production, the daily also writes.
Adevarul even draws up the “map of the big crisis”, noting that from west to east and from steel producing plants to soft drinks companies, Romania's biggest businesses say they can no longer cope with the effects of the crisis.” With large local communities depending on these companies to employ several thousand people, prosperous industrial regions are now facing the spectrum of unemployment. The same happens, unfortunately, all over the continent. Caught on the wrong foot by the start of the crisis while still being confused about the inaccurate forecasts of rating agencies, the European Commission has toughened regulations governing their activity. Rating agencies will now have to guarantee that their forecasts are not affected by conflicts of interests and that they are transparent. Also, these agencies cannot provide counselling services unless they possess all the necessary information and they must also make public the methodology and models used in their evaluations.
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2025-04-03
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