Romania Shows How State-Owned Companies Don’t Work

Romania is taking steps to fight rampant tax fraud and to trim its budget deficit by taking its nationalized industries public. With Romania being one of the most corrupt countries in Europe, with a score of 46/100 per Trading Economics, this effort to reform is a welcomed sign. But will it be enough to push back on bureaucratic bloat and mounting corruption?

Prime Minister Ilie Bolojan announced that he will spearhead the effort to reform Romania’s state-owned energy and transportation companies and to take the government’s companies public: “As for the companies,” Bolojan said, “they are from the energy and transport sectors and, very likely, in the first week of August, we will make public the companies that are to be listed. Listing, from my point of view, is a good thing because it increases the capacity of the Romanian stock exchange to be a stock exchange in an emerging country that is developing, but, at the same time, it also increases the financing capacity of this company, the transparency in terms of managing its activity.”

So why the push for sudden reforms? In Bolojan’s own words: “Romania is losing billions in euros in wasted profit from state-owned companies, which artificially increase their expenses, mostly on wages. We can no longer tolerate this situation.”