Fincl Crisis To Peak In 3-12Mos, Romanian Govt Should Cut VAT – Rompetrol Head

“We are hitting a recession which will lead to unemployment or deflation, and actions to overcome the economic downturn are based on tax cuts and fiscal optimization in order to stimulate consumption and reduce budget spending,” Patriciu said at a press conference.

Also, authorities should seek private capital to finance infrastructure development, in Patriciu’s opinion.

He said that Romania’s economy might grow in 2009 by 2%-3% and that the government should stimulate the economy by changing the law regarding expropriation of public interest domains and adapting public procurement legislation to the World Banks’ laws, in order to attract foreign capital.

Patriciu added the VAT should be reduced to 15% from 19%, according to EU’s recommendations.

The head of Rompetrol also said that the current economic turmoil would increase the number of bankruptcies of small and medium-sized enterprises and that the unemployed might be directed to infrastructure works as of 2009.

“The most affected sectors will be real estate and constructions. A bankruptcy is healing, like a surgery. It is a tragedy for owners and an advantage for consumers,” Patriciu said adding that in the last four months, Romania recorded around 12,000 bankruptcies.

Given the economic turmoil, some Western European companies might relocate their activities to Romania, as the country has a qualified labor force.

The businessman also said he is not yet interested in owning a bank and did not comment market rumors that he might take over the Anglo-Romanian Bank from Romania’s largest lender by assets BCR.