Corporate governance and corporate finance

OECD advises Romania on further reform of its state-owned enterprise sector


10/02/2023 – The OECD Review of the Corporate Governance of State-Owned Enterprises in Romania was launched at an event hosted by the Romanian Ministry of Finance in Bucharest on 10 February 2023. The Review is based on more than a year’s consultations between the OECD and representatives from the Romanian Government, as well as non-government stakeholders.

The new OECD report describes and assesses the corporate governance framework of the Romanian state-owned enterprise sector against the OECD Guidelines on Corporate Governance of State-Owned Enterprises. The report takes stock of past reform progress, and proposes further efforts to ensure that corporate governance provisions applicable to state-owned enterprises (SOEs) are in line with international standards.

The OECD recognises the importance of past reforms. Since 2011, with the adoption of Government Emergency Ordinance no. 109/2011 – later amended and approved by Law no. 111/2016 – Romania has undertaken important reform efforts to improve the ownership and corporate governance framework of its SOEs. However, challenges remain, with a generally weak implementation of the existent legal and institutional framework bearing on SOE governance.

The OECD recommends specific actions Romania can take towards improving ownership and corporate governance of Romanian SOEs including:

  • strengthen the state ownership function
  • strengthen board autonomy and independence
  • better define and monitor financial and non-financial objectives for SOEs
  • maintain a level playing field with other companies
  • strengthen internal control systems
  • improve transparency and disclosure practices both by ownership entities and SOEs.

Progress toward undertaking such reforms could already be underway. Reform 9 of Romania’s National Recovery and Resilience Plan includes commitments by the Romanian Government to revise it legal and regulatory framework related to state ownership. Many of the commitments are consistent with OECD’s findings and would, if fully implemented, go a long way toward aligning Romania with international best practices.

The OECD looks forward to engaging with the Romanian Government in undertaking adequate and timely reform. Better oversight and management of state-owned enterprises is important to improve their efficiency. And importantly, in addition to ensuring a better financial performance, higher efficiency in the state-owned sector helps provide the general public with better and more affordable services.

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