economic history
After the collapse of the Soviet Bloc in 1989-91, Romania was left with
an obsolete industrial base and a pattern of industrial capacity wholly
unsuited to its needs. In February 1997, Romania embarked on a comprehensive
macroeconomic stabilisation and structural reform program, but reform subsequently
was a frustrating stop-and-go process.
In 1999 Romania's economy contracted for a third straight year, by an estimated 4.8%.
Romania reached an agreement with the International Monetary Fund in August for a $547
million loan, but release of the second tranche was postponed in October because of unresolved
private sector lending requirements and differences over budgetary spending.
Since the fall of the Ceausescu regime in 1989, successive governments sought
to build a Western-style market economy. The pace of restructuring had been slow,
but by 1994 the legal basis for a market economy was largely in place. After the
1996 elections, the coalition government made an attempt to move rapidly and eliminate
consumer subsidies, float prices, liberalise exchange rates, and put in place
a tight monetary policy.
Subsidies to loss-making state-owned enterprises continued to be a serious drain
on the state budget. Despite delays in privatizing certain large companies, the
State Ownership Fund did make some progress. Altogether, the private sector reached
an estimated 55% of the gross domestic product and employed approximately 52%
of the work force. | 1
| 2 | 3 |
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