What can Romania do with €1.5 bln

The Romanian state wants to attract between €500 million and €1.5 billion from international capital markets in the second half of this month, meant to cover part of the budget deficit. However, there are several question marks regarding the ability of the authorities to manage a eurobond issue of such magnitude, considering that the €500 mln loan contracted by Bucharest City Hall in 2005 has not yet been fully used.

The question is: When we take the money, do we know how to administer this? "As of mid-September, we intend to launch the issue, and hope to decide on two or three brokers early next week, from a list of the ten banks selected. We also initiated the selection of the law firm that will provide legal advice for the issue," said Bogdan Dragoi, State Secretary in the Ministry of Finance, who was Financial Director of Bucharest City Hall when the €500 mln eurobond issue was launched.

Bucharest City Hall has some €200 mln left to spend, from the money attracted four months ago, official sources told Business Standard. The destination of the money, according to these same sources, would be the modernization of the heating network, after most funds were invested in infrastructure. City Hall representatives had not commented by the time the print edition closed. At the end of the first half of 2005, Adriean Videanu, General Mayor at the time, and currently Minister of the Economy, announced that City Hall was successful with "the most spectacular bond issue in Central and Eastern Europe in the past 15 years, in terms of structure and volume." However, unlike in 2005, Romania is in full financial crisis, investments have been frozen, the number of tax-paying companies is dropping, and the leu has lost against the euro. In this context, what seemed to be a very inexpensive loan is proving to be very costly.

standard.money.ro