Romania decides to wipe off railway company CFR's EUR 900 mln debt

The Romanian Government will turn railway company CFR SA's EUR 900 million debt into shares which will be taken over by the Transport Ministry, as sole shareholder. Most of the debt consists in unpaid taxes to the state budget, social insurance budget and special funds, but does not include taxes on salaries. According to the Government, this kind of support for CFR, which is the only company in Romania that manages the railway infrastructure, does not represent state aid.

The details of the debt wipe were included in an Emergency Ordinance project, and failing to enforce these measures fast would avert from reaching the objectives established with the International Monetary Fund, according to the project. CFR is one of the state companies closely monitored by the Fund. CFR Marfa, CFR's freight arm, is due to privatize this year. Romania plans to sell a stake of 20 percent in CFR Marfa, either through an Initial Public Offering, or with a strategic investor, by October this year. The company posted losses of EUR 31.3 million last year, 68 percent higher than the level approved by the Government. CFR Marfa’s last profitable year was 2007. CFR Calatori, the passenger transport art of CFR SA, will axe over a 1,000 jobs in March this year. The measure follows the agreement between the Romanian Government and the International Monetary Fund, the European Commission and the World Bank. Laid off employees will receive six months redundancy pay. editor@romania-insider.com