Romania’s Parliament has approved a law that stops any sale of state-owned shares for the state for the next two years.
The Social Democratic Party, which has the largest number of lawmakers, initiated the bill which was opposed by the minority center-right government.
The law which was approved on June 10 will ban the sale of state-owned stakes in any company or bank in which the government holds shares, regardless of the size of participation. The law also suspends any ongoing privatization.
President Klaus Iohannis can veto the bill which has been criticized by investors.
The Social Democrats cited the negative effects of the coronavirus crisis on the economy, and the potential devaluation of companies during the crisis, to justify the proposal.
The Social Democrats have often opposed the privatization of state-owned companies.
”The PSD will never allow the sale to foreigners of the last pearls of Romania’s economy: CEC Bank, Hidroelectrica or Nuclearelectrica,” party leader Marcel Ciolacu said last week.
But the Bucharest Stock Exchange argued against such regulation pointing out the positive impact of publicly offering shares at state-controlled companies.
It said that the sale of minority shares would not necessarily terminate the state’s control over the company.
The ruling Liberal Party said it would contest the bill at the Constitutional Court.
Iohannis, who used to lead the Liberal Party, is expected to send the legislation back to Parliament.