BUCHAREST (Romania), June 10 (SeeNews) - A Romanian draft bill suspending the sale of state-owned shares for two years, if approved, will hold back the development of the capital market and jeopardise the country's economic recovery, investment fund Fondul Proprietatea [BSE:FP] said.
The fund has urged the Chamber of Deputies to analyse the potential negative effects of the proposed legisation and vote it down, Fondul Proprietatea said in a press release.
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The Senate passed in mid-May the draft bill, which was sponsored by Social Democrat Party (PSD) senators, and it is now pending approval by the lower chamber.
While the draft bill claims to protect Romania’s economic interests in difficult times, it will likely have the completely opposite effect due to its excessive nature, according to the fund.
The proposed legislation would entail a freeze of listings of state-held shares such as Hidroelectrica on the Bucharest Stock Exchange, which in turn would jeopardize the bourse's potential upgrade to emerging market status, it added.
According to the fund, if the draft bill is approved, investors would be forced to look for investment opportunities elsewhere, Romania's country risk would increase resulting in higher financing costs for the finance ministry, and the state budget, as well as large energy and infrastructure investments would lose a key source of financing.
Fondul Proprietatea's shares were trading 1.29% to 1.18 lei ($0.27/ 0.24 euro) on Wednesday on the Bucharest bourse, as of 1029 CET.
(1 euro = 4.8377 lei)