State aid, still an issue in Romania

For Romania’s EU integration negotiations to be finalised by the end of this year, the “Competition” chapter, among others, needs to be sorted out. Herein, solving the state aid issue plays a vital role.

In line with the community legislation in this domain, the mere accumulation of debts can constitute, under certain circumstances, a state aid in itself, regardless of the state’s intention to annul or reschedule the respective debts, states Dragos Negrescu, one of the authors of the study “Politica de protectie a concurentei” (Competition Protection Policy), which was presented on Thursday during the conference organised by Centrul Roman de Politici Economice (Romanian Economic Policies Centre – CEROPE) and the Open Society Institute of Budapest.

The other author of the study is Gheorghe Oprescu. “Booking accumulated debts as state aid is particularly relevant in the case of Romania, where arrears are considered as debts accumulated in the past,” Negrescu says.

According to Negrescu, sovereign guarantees for loans, which have been granted within the limit of the entire ceiling, are a form of state aid and the Competition Council should be notified.

Negrescu also warned about the possibility that the state guarantees for the population’s deposits with the Romanian Savings Bank (CEC) are likely to be characterised as state aid.

“The state’s guarantee for the population’s deposits with CEC and its corrective (the non-payment of a contribution to the Deposit Guarantee Fund within the banking system) can be regarded as state aid, which benefits the owners (in case CEC should be privatised). When the current chairman of CEC came into position, he said that the elimination of state guarantees for CEC deposits is not among priorities. We might be in the situation where the state guarantee should be in this case considered as state aid and have to be restituted,” Negrescu also said.

The author of the study also says that had privatisation processes in Romania started earlier, many of the closed transactions would have now met the prescribed term of 10 years stipulated for state aids. Privatisation deals in Romania most of the times include aspects pertaining to state aid.

adrian.mirsanu@zf.ro