Petrom: Tough action needed for economic rebound

Publish date: 22-07-2009
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The government must take hard, unpopular measures to help the economy get back of track. It would be good if it chose two, maximum three industries such as energy, agriculture, and construction, to focus on, support them, and covert them into the engines of Romania's future growth, the Chief Executive Officer of Petrom, Romania's largest company, Mariana Gheorghe, told Business Standard.

The official said she is expecting an eight percent drop in the Romanian economy this year, and that the downward trend to continue in 2010. "I believe that the economy will continue to slide in the second half of 2009 and possibly, in the first half of 2010, due to the economic context. Regarding the 10 percent drop forecast, I would not go that far. I expect the economy to bounce back in the second half of 2010," Gheorghe said.

"These are very difficult times. I would not like to be in the shoes of authorities, but I strongly believe that they should be firmer regarding unpopular measures, with economic impact, to accelerate the rebound. Otherwise, we can witness much more negative distortions than we presently expect," Petrom CEO added. She said that the authorities should grant state aid, but accompanied by viable plans that companies would commit to. Moreover, Gheorghe leaves room for interpretation that in the current political-economic context and with no abrupt change in terms of anti-crisis measures, taxpayers could end up paying even higher taxes. "I do not expect taxation to increase this year, but next year, it depends... If the economic activity is not stimulated, if companies are not helped to use the resources from the European Union, if the investments programs are not developed, then there will be no financial resources for public spending," the businesswoman added.

She said that it remains to be seen which the results of programs such as the "First Home" (a program which is meant to boost the real estate market), of the promises regarding the settlement of the state debt will be. "I have not seen results strong enough regarding the attraction and use of the European funds. I continue to believe that this is a budget financing source insufficiently used. I think that it is a lack of responsibility of any company manager not to use resources from public sources," the official added.

Gheorghe further said the greatest challenge is the fact that presidential elections are to be held this year. Beside the fact that this crisis hit Romania later than the United States and Western Europe, the need for harsh, unpopular action is greater than ever.

When asked what measures should be taken in order to stimulate the economy, she said that, regarding the payment of the value-added tax (VAT) to companies, this is a matter that should be done professionally, to allow companies to operate normally. "The problem is that the government also needs cash to pay its debts to companies. I see the government administration as having the same principles as the management of a company, at a different scale, however," the manager said.

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