Next year's budget has infrastructure, education and healthcare as priorities, which are exactly those areas where the state wants to build as much next year as it has been unable to over the last few years. Construction companies, from distributors of construction supplies to contractors, will stand to gain the most. Will the state be the main client of builders in 2007?
Romania will have its biggest budget in history next year: 38 billion euros in revenues and expenditures of more than 41 billion euros The Government has scheduled investments (capital expenditures) in the budget worth 6.6% of GDP (7.1 billion euros), with a large part of the budgetary allocations going to the construction field.
According to the budgetary provisions for 2007, the state will be feeding 2.5 billion euros into the construction market through road, rail, school and healthcare infrastructure projects. This money is fuelling the already strong demand on this market, boosting its growth at a pace of about 15% in 2007.
"That more money will be allocated to the public contracts will benefit the companies, which have already opened construction supplies production facilities in Romania, as well as those players which have a strong position on the import segment," says Daniel Catanas, general manager of Wienerberger Sisteme de Caramizi.
He anticipates the demand for construction next year will be mainly covered by companies already operating on the market.
"I find it hard to believe that companies which have not arrived until now will be able to meet the demand of next year," he says.
The Transports Ministry budget will amount to 3.1 billion euros next year, slightly up from this year. The Government has 400 million euros set aside in next year's budget for highways alone.
"The major infrastructure projects have to speed up, because we are doing the worst in this respect of all the countries that joined the European Union," says Razvan Niculescu-Aron, vice-chairman of UEPC (European Union of Developers and House Builders).
In his opinion, highway construction will become the drive behind the growth of the construction market in a few years, on condition that the funds allocated to the Transports Ministry have this segment as a priority.
The Transports Ministry 2007 budget also includes 480 million euros for the rehabilitation of the railway infrastructure, and another 680 million euros for the modernisation of road network. The National Housing Agency will get about 90 million euros to build homes in 2007.
"The impact of construction funds is very much up to the capability of the ministries to manage the funds they get. For instance, very few companies dared participate in the tenders held for the reconstruction after the floods," explains Catanas. The construction market got a strong boost after the floods in 2005, which showed in the value of the construction works.
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