Nay to debt for equity swap

The Senate Budget-Finances-Banks Panel yesterday rejected the emergency ordinance issued by Mugur Isarescu-led Government last November, which stipulated that debts held by state-owned or private companies to the state budget, the social insurance budget, special funds budget and the former SOF can be turned into shares.

The ordinance will remain in effect until is completely overruled by both the Senate and the Deputy Chamber plenum.

Privatisation minister Ovidiu Musetescu and Labour minister Marian Sarbu supported this decision as they consider this normative document opposes the Governing Programme and blocks the privatisation process.

The ordinance stipulated that the value of debts that cannot be paid off would change into shares and be sold on the market.

The debts would have been recouped through the share sale process from the potential purchasers. The ordinance also stipulated that interests and penalties derived from the debts having been swapped for shares should be written off.

The fundament note of the law draft said that this manner of recouping receivables would lead to resuming economic activity of companies. Moreover, the law draft supposedly cut the debt recovery time.

The Privatisation minister yesterday stated that the ordinance enforcement led to “the abnormality that the state becomes a again shareholder” in the already privatised companies.

Musetescu pledged that the Government would issue other normative documents to regulate this field within one month. He added that the Executive is mulling over a law draft to cut financial arrears in the economy. According to this draft, the debts unlikely to be recouped will be written off.

“We intend to draw a law draft to consider the arrears from a realistic point of view, which will write off the debts unlikely to recoup,” added Musetescu. The Executive also intends to write off a part of debts held by the companies to be privatised under the PSAL I agreement.