Romanian entrepreneurs keep their companies undercapitalized "to protect their money"

Romanian entrepreneurs are decapitalizing their companies because the legislation is unpredictable, argued Florin Pogonaru, president of the Romanian Businessmen's Association (AOAR).

In a much similar way, but not so openly discussed, the entrepreneurs (and bigger companies) find it morally justified to operate tax optimization on the verge of tax avoidance on the grounds that the public money is not well spent. Given this climate of distrust, the fiscal consolidation can hardly be achieved other than by cutting expenditures as the budget revenues hover around 30% of GDP.

Pogonaru's statements come in the context in which Florin Georgescu, first deputy governor of the National Bank of Romania (BNR), urged the entrepreneurs to bring EUR 32 bln to companies so that the banks could finance and develop them. He mentioned that currently, only 12% of Romanian companies are bankable.

"Employers protect themselves from the arbitrary application of the law, from all kinds of legislation that appears overnight. (...) As long as you have unpredictability in the legislation, the business environment defends itself as best it can; it defends itself with money, not in the public space, respectively in companies. As long as you have the law enforcement arbitrariness, you don't want to seize the company's assets and then go on trial for about three years", Florin Pogonaru explained during the business show ZF Live.

(Photo: Marian Mocanu | Dreamstime.com)