As the center-left government led by Sorin Grindeanu has initiated the legal procedures for the creation of Romania’s first sovereign fund, the head the Social Democratic Party, Liviu Dragnea, suggested that the country might copy the structure of the funds that exist in Norway and Poland.
Dragnea said that this fund, which will include all the state-owned companies that are profitable, will be used to finance the construction of hospitals and of new roads and railways. He explained that once it becomes operational, the Sovereign Fund for Development and Investments (FSDI) will issue bonds that can be acquired by retail and institutional investors.
The PSD head suggested that the ultimate goal of the fund is to finance the “re-industrialization” of Romania.
“The state will remain 100 percent shareholder, it will not sell any share, because these are strategic companies and, in addition, this fund, as it happens in other parts of the world, together with the Fund for Large Investments and the international banks, with which we had official discussions, we will make joint ventures to finance large investment projects, strategic in Romania, which will also start to build plants, production capacities in areas where they didn’t exist,” Dragnea told public broadcaster SRR earlier this month.
At this moment, it is not clear how the fund will be managed, but earlier reports suggested that professional managers will be recruited to head the fund, something that is already happening in key state-owned companies such as airline operator Tarom or rail freight conglomerate CFR.
According to the government’s plan, the fund should grow to EUR 10 billion in a 4-year period.