Romania to Wipe Out Defence Sector Debts

Romania has announced plans to cancel the debts of 15 companies in the defence sector, citing the worrying geopolitical context, which it says requires strengthening defence capacities.

The value of the debts is estimated at around 1 billion lei (222 million euro), according to the media. The dues to be canceled include taxes, social contributions and debts to the risk fund for external loans guaranteed by the state.

As well as emergency ordinance adopted on Wednesday, the government will take other measures to re-start activity in state-owned companies that produce or sell weapons, ammunition and other military products.

“Given the current geopolitical context we need to improve Romania’s defence capacity by taking immediate steps to assure the economic and financial revival of operators of strategic importance," Prime Minister Victor Ponta said.

Romania has not concealed its deep concern over developments in Ukraine. The danger of war with pro-Russian separatists in the east and south of the neighbouring country prompted Romania last month to set aside more money for the defence budget this year.

The government announced it will raise the defence budget by 700 million lei (some 156 million euro), from the current level of 6.4 billion lei, to upgrade military capabilities.

Romania fears that after annexing the peninsula of Crimea from Ukraine, Russia may extend its operations in Ukraine to link up with the break-away pro-Russian region of Transnistria in neighbouring Moldova. Russian troops are already stationed in the self-proclaimed republic of Transnistria.

Moldova was once part of Romania, which cherishes ties with the Romanian-speaking country.

With a 694km-long border with Ukraine, Romania has been...