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Romania says it will attract record direct investments in 2006

Romania will attract a record 54% more in foreign investment this year than last, as preparations for European Union membership boost investor interest, Deputy Prime Minister Bogdan Pascu said.

Foreign direct investments will exceed €8 billion ($10 billion) at the end of this year, compared with a preliminary €5.2 billion reported for last year, and will continue to grow in 2007, Pascu said. „Investments in 2006 will significantly exceed our expectations and I can now tell you for the first time that they'll amount to about €8 billion,” Pascu said in a statement e-mailed by his office in Bucharest. Romania, which was invited by the European Commission to join the EU as of January 1 together with neighboring Bulgaria, has this month concluded the sale of its 37% stake in top lender Banca Comerciala Romana SA to Austria's Erste Bank AG for €2.2 billion, the biggest-ever transaction in the country. The government in 2005 introduced a 16% flat tax to replace the old 25% corporate tax and personal income taxes as high as 40% in an attempt partly aimed at attracting foreign investments in the country to boost labor productivity and cut on imports. The central bank said September 22 that direct investments in the first seven months of this year rose 48% from a year earlier, to €4 billion from €2.7 billion, covering 82% of the current-account deficit. Romania's government previous forecast on foreign direct investments this year stood at €7 billion. (Bloomberg)