Romania close to agreement on land reform

09 September 1998

Romania close to agreement on land reform

THE Romanian Government is close to reaching agreement on a formula for the restitution of agricultural land held in state farms.

Delays in formulating an agreement have meant a lack of investment in the sector because of the uncertainty over the Governments policy.

Political parties are poised to accept legislation allowing the return of up to 20.2 hectares (50 acres) of land per former owner and providing for financial compensation where this is not possible. The law would amend 1991 legislation that gave back up to 10 hectares (24.7 acres) each to some 5 million mainly peasant farmers, which created a large number of small and inefficient farms

Politicians now feel it is better to privatise remaining state farms as units rather than opt for further land redistribution.

The failure to institute market-led reforms has meant the World Bank has frozen half of a loan agreed with Romania. The bank wants Romania to lower import tariffs further and to privatise more state-owned farms. It has also raised objection to the introduction of new subsidies for wheat storage and for millers and bakers.

Romania raised the tariffs on wheat and flour from Hungary last month after imports threatened to overwhelm local production.

• Financial Times 09/09/98 page 48