The Foreign Investors Council (FIC) celebrated 25 years of activity in Romania, an occasion that brought together in a constructive dialogue the directors and presidents of the largest companies in the country, representatives of the Government, Parliament, Presidential Administration, regulatory authorities, and international institutions. FIC has a solid history as a partner for debates and consultations with the authorities and a visionary approach to economic issues, with a focus on private investment. During the 25 years of activity, the organization brought together over 255 Romanian companies with foreign capital which contributed with recommendations, analyses, studies and debates that supported Romania’s evolution. Starting with the establishment of the organization, the FIC Board of Directors members have been ambassadors of foreign investments and of Romania as a destination for FDIs. The organization has developed in line with foreign investments in the country, which grew from a 6.8% FDI share of Romania’s GDP in 1997 to 38.64% FDI share in 2021. During the event, the Prime Minister of Romania, Mr. Nicolae Ciuca, emphasized the constant partnership between the Government and FIC in terms of stimulating foreign investments and the organization’s contribution to identifying the best measures for medium and long-term sustainable economic development, dialogue that led to a record level of foreign investments in 2022. Also, the Minister of Economy, Mr. Florin Spataru, the Minister of Labour and Social Solidarity, Mr. Marius Budai, and the Minister of Environment, Waters and Forests, Mr. Barna Tánczos, highlighted the significant collaboration with the investors’ organization, and the measures they are considering to support investments and economic activity: the interactive map of the economic sectors – the Economic Atlas, the industrial development strategy, rethinking of the activity by reducing the impact on the environment and through new technology, ensuring the necessary workforce (by improving dual and technological education and career orientation). The investors in dialogue with the authorities have covered the perspectives of the new Romanian Agency for Investment and Foreign Trade, the process of examining foreign investments, the status of implementation of NRRP and EU funds available to complement private investments, Romania's accession to the OECD, the fiscal framework stability, the implementation of the digitization processes at the level of the administration and the environmental protection measures.
The seasonally adjusted government deficit stood at 3.3% of GDP in the euro area and 3.2% of GDP in the European Union in Q3/2022. Romania and Hungary recorded the highest such deficits, according to Eurostat data. Deficits grew in the EU and the euro area in July-September 2022, compared to Q2/2022, following the measures taken by governments to mitigate the impact of high energy prices. The EU member states with no government deficit in Q3/2022 were Ireland, Portugal, Lithuania, Denmark, the Netherlands and Sweden.
The National Bank of Romania (NBR) expects annual inflation rate to probably decline in Q1/2023, in line with the latest medium-term forecast, but to decrease significantly faster afterwards and to reach single-digit levels as early as Q3/2022, almost three quarters earlier than previously projected. That would be ascribable to the extension of the energy price capping and compensation schemes until 31 March 2025 concurrently with the changes made to these schemes as of 1 January 2023, according to the minutes of the monetary policy meeting on 10 January 2023 published by the National Bank.
A number of threats remain on the horizon in Romania’s macroeconomic picture, with the National Bank talking about the size and pace of the widening external deficit in 2022 being particularly worrying, company bankruptcies, exchange rate risks, high interest rates, lending decline, major risks associated with the fiscal policy stance and the economic slowdown, according to the minutes of the monetary policy meeting on 10 January. The protraction of the war in Ukraine and the extension of the related sanctions generated, however, considerable uncertainties and risks to the outlook for economic activity, hence to medium-term inflation developments, Board members repeatedly showed. They referred to the possibly stronger effects thus exerted on consumer purchasing power and confidence.
General government gross debt to GDP ratio in the euro area stood at 93% at the end of Q3/2022, down from 94.2% at the end of the previous quarter. In the European Union, the ratio also decreased from 86.4% to 85.1%, according to Eurostat data. The highest ratios of government debt to GDP among EU Member States at the end of Q3/2022 were recorded in Greece (178.2%), Italy (147.3%), Portugal (120.1%), Spain (115, 6%), France (113.4%) and Belgium (106.3%), and the lowest ones were in Estonia (15.8%), Bulgaria (23.1%), Luxembourg (24.6%), Denmark (30.7%), Sweden (33.6%), Lithuania (37.3%), Latvia (39.9%), the Czech Republic (45.2%) and Romania (47.8%). Romania recorded a 48.3% government debt to GDP ratio in Q2/ 2022 and 48.1% in the first three months of 2022.
JC Flowers investment fund, founded by US billionaire J. Christopher Flowers, plans to sell First Bank, according to sources close to the talks, cited by Bloomberg. JC Flowers has collaborated with Societe Generale to identify potential buyers. According to the cited sources, First Bank would be valued at around EUR 150 million in an eventual transaction. Italian group UniCredit has held preliminary talks with JC Flowers in the past few weeks, but has decided not to make an offer, some of the sources have indicated. Under these circumstances, the US investment fund could approach potential new buyers in the following period.
EximBank, a state-owned bank that is among the ten biggest credit institutions in Romania asset-wise, which has entered the retail segment in 2023 after the finalization of the merger with Banca Românească, offers interest rates on RON-denominated term deposits ranging from 6.75% to 8% for individuals, according to information provided by the bank. Interest rate can thus go up to 8.25% for a one-year deposit made online.
The flow of loans contracted by companies for machinery and equipment has grown considerably, but this type of loans have a modest contribution to financing investments (6% in 2020, according to the National Institute of Statistics), with most investments being financed from legal entities’ own sources (75%), the National Bank of Romania (NBR) has indicated. On the other hand, the volume of loans granted for current needs (stock financing and treasury loans) increased substantially in 2022. These loans accounted for 70% of the total new loans in the first nine months of 2022, compared with 67% in 2021, NBR has also pointed out.
Romanian national railway company CFR SA has launched an over RON 471 million (about EUR 95 million) project, VAT not included, financed within the Transport Operational Program (POT), for the modernization of the North Railway Station in Bucharest. CFR SA has transmitted the tender documentation for the design and execution contract corresponding to the first phase of the project to the Public Electronic Procurement System (SEAP). The investment is meant to turn the North Station into a modern multimodal point and an attractive commercial area of Bucharest.
Policolor-Orgachim, which manufactures paints and lacquers for construction, will expand its factory in Militari area of Bucharest this year by 1,000 square meters, following a EUR 2 million estimated investment. The paints factory, located on Timisoara Boulevard, currently spreads on 3,500 square metres, and the expansion will be carried out by Masterbuild, the company selected following a tender. The extension project should be finalized by the middle of 2023.
Amazon.com’s cloud services division plans to invest another USD 35 billion by 2040 to expand data centers in Virginia. Amazon Web Services (AWS) has indicated that the new investment will create 1,000 jobs. Virginia’s Republican Governor, Glenn Youngkin has stated that AWS will establish multiple data center campuses across Virginia. In 2021, AWS announced that it had invested USD 35 billion in data centers located in northern Virginia from 2011 to 2020 and had 3,500 full-time employees at its data centers in the state.
Ministry of Investments and European Projects (MIPE) is preparing a government decision to establish how the bonuses for work on externally funded projects - which will be minimum 10% and maximum 50% - will be granted. Some local elected representatives will also benefit from a bonus of up to 25%. According to a government decision currently up for public consultation, teams working on projects financed from non-reimbursable European funds and/or reimbursable external funds, as well as for the implementation of projects financed through the Recovery and Resilience Facility will benefit from an up to 50% increase in their basic salaries or employment allowances while carrying out their activity under these circumstances, depending on the actual time worked per month on project activities.
The Social Democratic Party (PSD) announced, in an official press release, that MEP Dan Nica’s report on regulating and boosting the European semiconductors industry had been approved by the European Parliament’s Industry, Energy and Research Committee (ITRE) on Tuesday. The legislative proposals submitted by the leader of PSD delegation were adopted with 67 votes in favor, 1 vote against and 4 abstentions. Moreover, the committee also voted on the mandate to enter into inter-institutional negotiations, with 70 votes to one against, with one abstention.
The European Commission launched its European Cancer Imaging Initiative on Monday (23 January), which aims to create a common digital infrastructure across the EU to facilitate data sharing on the disease. The initiative aims to help healthcare professionals integrate cutting-edge imaging technologies to improve cancer detection and treatment through digital infrastructure.
The number of social assistance (guaranteed minimum income) beneficiaries was 163,789 in December 2022, 4,064 more than in the previous month, according to data centralized by the National Agency for Payments and Social Inspection (ANPIS). The most beneficiaries were registered in Dolj (10,109), Bacău ((9. 202), Teleorman (7,772) and Buzău (7,771) Counties, and the fewest in Bucharest (247) and in Ilfov (862) and Timiș (1,318) Counties. The average amount paid by the Romanian state to social aid beneficiaries in the last month of 2022 was RON 269.57, while the total sum paid amounted to RON 44.136 million. The highest average sums paid (current rights) were recorded in Sălaj (RON 353.7), Brașov (RON 324.68) and Mureș (RON 324.12) counties.
Children who need psychological counselling and treatment can now benefit from state support. These psychological therapy sessions will be settled by the state, through the social inspection and payment agencies in each county. The state will pay for maximum ten sessions (50 minutes each) of psychological treatment for children, for a period of up to 120 days. The state thus means to help children through the National Children’s Support Program amid the COVID-19 pandemic - "Out of Care for Children". According to statistics, the number of children who have suffered due to the pandemic has been very high, which is why this program has been launched.