Romanian administration forms a special unit to oversee the modernization of state-owned corporations
The Romanian Government has taken a significant step towards modernizing its public enterprise sector with the creation of a working group for reform. Approved on July 24, the group, led by Deputy Prime Minister Marian Neacşu and Deputy Prime Minister Dragoş Anastasiu, will focus on increasing transparency, enhancing corporate governance, streamlining management structures, and improving performance evaluation.
The key objectives of the working group include:
- Increasing Transparency: Comprehensive datasets on state-owned enterprise (SOE) managers will be published, detailing their identity, remuneration, performance indicators, and company financials. This move aims to make SOE management more open and accountable.
- Amending Corporate Governance Legislation: The size of boards of directors will be reduced, and caps will be imposed on board members' earnings to address concerns about excessive remuneration not matched by company performance.
- Implementing Stricter Performance-based Evaluations: New indicators will be used to better align management incentives with enterprise results, ensuring that SOE leaders are driven by the success of their companies.
- Streamlining Operations: Underperforming SOEs, particularly those with losses over three consecutive years, may be closed or merged to improve efficiency and fiscal sustainability.
- Reorganizing the Monitoring Authority: The Authority for the Management of State Holdings in Public Enterprises (AMEPIP) will be reorganized to strengthen its monitoring capacity, ensuring closer performance monitoring and better governance.
- Encouraging Privatization and Private Investment: Potential stock exchange listings of some public companies and public-private partnership (PPP) projects are being considered to unlock economic and social benefits.
These reforms align with Romania's National Recovery and Resilience Plan (PNRR) and EU standards, aiming to improve fiscal consolidation, transparency, and competitiveness within the public enterprise sector.
The working group will consist of representatives from various ministries, including Finance, Economy, Transport, Energy, Environment, Health, Justice, Digitalization, and the Secretary-General of the Government. The group will also evaluate the performance of state-owned companies and propose structural reforms.
It's important to note that this working group is distinct from an expert advisory body still to be formed, which will consist of private sector professionals serving as external consultants. Certain public companies may also be listed on the stock exchange as part of the privatization and investment drive.
Lastly, the management compensation of SOEs will be revised by the working group, further demonstrating the government's commitment to reform and modernization within the public enterprise sector.
[1] Government of Romania, Press Release, July 24, 2021. [2] European Commission, Romania's National Recovery and Resilience Plan, 2021. [3] Organisation for Economic Co-operation and Development (OECD), Romania Country Profile, 2021.
The working group, appointed by the Romanian Government, will focus on revising the management compensation of state-owned enterprises (SOEs), as part of their commitment to reform and modernization in the public enterprise sector. This move is also expected to encourage business investments, as potential stock exchange listings of public companies are being considered.
The composed working group, including representatives from the Finance, Economy, and other relevant ministries, will evaluate the performance of SOEs and propose structural reforms aimed at increasing transparency, amending corporate governance legislation, implementing stricter performance-based evaluations, streamlining operations, reorganizing the monitoring authority, and encouraging privatization and private investment. This aligns with Romania's National Recovery and Resilience Plan (PNRR) and EU standards, aiming to improve fiscal consolidation, transparency, and competitiveness within the public enterprise sector.
