News

Daily Newsletter - 16 January 2023

Summary

FIC (3)
Macroeconomic (4)
Financial (4)
Investment (3)
Legislative (2)
European News (1)
Social (2)
FIC 
About RON 170 bn annual investments are needed to make the transition to a green economy
According to the Foreign Investors Council’s estimates, about RON 170 billion average annual investments are needed, from both public and private sources, to make the transition to a green economy. According to the European Union’s new targets for reducing greenhouse gas emissions, Romania should make major changes to its energy mix in favor of a higher share of renewable energy sources, gradually reducing the contribution of coal.

Romanian industry has reduced greenhouse gas emissions the most since 1990. 

Romanian industry has reduced greenhouse gas emissions the most since 1990. 

A vital criterion for large investors remains the stability, predictability and transparency of the legislative framework

A vital criterion for large investors remains the stability, predictability, and transparency of the legislative framework, as also highlighted by the latest edition of the Business Sentiment Index (BSI) published by the Foreign Investors Council. This criterion was not met for the measures taken by Romania in the energy domain, most of them being adopted in 2022 through emergency ordinances without the necessary time to consult with the parties involved. Although important market players are making major efforts to adapt to new regulations, compliance and implementation are becoming increasingly burdensome given the tight deadlines, multiple changes over the past year and imperfections in the legislation, and thus the functioning of the market is affected. FIC reiterates the need for a predictable legislative framework and consultation with the business environment to reach the best solutions to ensure energy security, protecting vulnerable consumers and the viability of all actors involved in the energy sector, and at the same time, member companies’ openness for dialog with state authorities to provide analyses and the expertise of professionals from private sector. We continue to be the partners of the Government in identifying sustainable measures to overcome the energy crisis, but also to ensure Romania’s economic development.

FIC: Vital criterion for large investors remains stability, predictability and transparency of legislative framework

FIC: A vital criterion for large investors remains the stability, predictability and transparency of the legislative framework

Important investments in the energy system are needed in order to ensure energy security and independence in the future

FIC: Important investments are needed in the national energy system

FIC: A vital criterion for large investors remains the stability, predictability and transparency of the legislative framework

FIC: A vital criterion for large investors remains the stability, predictability and transparency of the legislative framework

FIC: "A vital criterion for large investors remains the stability, predictability and transparency 

FIC: "A vital criterion for large investors remains the stability, predictability and transparency 

FIC criticizes overcharging

Foreign investors criticize the Government for the adoption of GEO 186/2022 regarding energy measures

FIC: Romania is overzealous regarding the solidarity tax

Investors in the energy sector condemn Romania’s taxation system! They want more legislative transparency

FIC: The adoption of GEO 186/2022 did not take into account the existing legislative framework

Foreign investments in Romania reached a record level of over EUR 11 billion in 2022
Foreign investments in Romania reached a record level of over EUR 11 billion in 2022. The total balance of foreign direct investments amounts to around EUR 100 billion, both new investments and reinvested profits. The biggest foreign investors in Romania are Germany (EUR 15 billion), Austria (EUR 11 billion), France (EUR 10 billion), Italy (EUR 8 billion) and the United States (EUR 8 billion).
Macroeconomic 
Romania ended 2022 with 16.37% inflation in December
Romania ended 2022 with 16.37% inflation in December, after the annual rate had peaked at 16.8% in November. The biggest price increase was recorded for food, of 22%, compared to December 2021, according to data from the National Institute of Statistics (INS). Meanwhile, the prices of non-food products grew by 14.9% in December 2022 year-on-year and services were 9.7% more expensive. Romania had had 8.2% inflation in December 2021.
Most CEOs fear recession will be worse than financial crisis
The vast majority of CEO respondents (98%) are bracing for an economic downturn characterized by geopolitical tensions, supply chain disruption and ongoing COVID-19-related uncertainty, but appear split on its length, depth and severity. These are some of the findings of the EY CEO Outlook Pulse – January 2023 that underline the uncertainty that looks set to define the business environment in 2023.
Romania’s external debt increased by EUR 7 billion in the first 11 months of 2022
Romania’s external debt, public and private one, reached nearly EUR 144 billion in November 2022, compared to EUR 137 billion at the end of 2021, according to the latest data published by the National Bank of Romania. The increase is mostly due to private debt, as public external debt decreased, even though slightly, from EUR 58.8 billion to EUR 58.4 billion.
IMF chief expects global growth forecasts for 2023 to be maintained at 2.7%
The International Monetary Fund is unlikely to revise downwards its 2.7% global economic forecast in 2023, according to Kristalina Georgieva, the managing director of the international financial institution. She has added that the feared oil price boom has not materialized and the labor market remains solid. Mrs. Georgieva has pointed out that 2023 will be another "difficult" year for the world economy and inflation will remain high, but nevertheless she does not expect the IMF to revise its growth forecasts several times, as it did in 2022, unless there are surprising developments.
Financial 
Insurance market exceeded expectations with consistent increases in written premiums in 2022
The insurance market exceeded expectations with consistent increases in the volume of gross written premiums in 2022. Underwriting reached RON 12.1 billion in the first 9 months of 2022, up by 23% year-on-year. This market evolution, although driven by the dominant segment, namely RCA insurance, following City Insurance’s bankruptcy, which was the biggest collapse in the history of the market, has significantly boosted underwriting in most counties in Romania.
Lucian Anghel took over as Chief Risk Officer at EximBank at the beginning of 2023
Lucian Anghel, who led Banca Românească from January 2020 to December 2022, took over as Chief Risk Officer (CRO) at EximBank at the beginning of 2023, following the finalization of the merger between the two banks. The merger between EximBank, whose majority shareholder the Romanian state is, through the Ministry of Finance, and Banca Românească was officially registered with the Trade Registry Office, at the beginning of January 2023. The price paid by EximBank for Banca Românească was almost EUR 60 million.
Current account deficit grew to EUR 25.34 billion in January-November 2022
The current account deficit grew to EUR 25.34 billion in January-November 2022, compared to EUR 15.66 billion in the same period of 2021. Given that international trade in goods generated an over EUR 8.5 billion higher deficit, the primary income balance deficit was also on the rise, offset by the higher surplus in the services sector, according to NBR data. The goods balance thus recorded a EUR 29 billion deficit in the first eleven months of the year, up by EUR 8.59 billion.
NN Romania launches insurance offering financial support to clients who lose their jobs
The past few years have increased Romanians’ need for protection in unforeseen situations that may affect their lifestyle, with the macroeconomic and geopolitical context amplifying concerns about job stability and family financial security, according to a press release. In order to meet its clients’ needs, NN Romania has added job loss insurance to the portfolio of protection solution offered to clients.
Investment 
Bosch plans to invest USD 1 billion in a components plant
Bosch, the German engineering and technology company, plans to invest USD 1 billion to manufacture components for vehicles using new technologies. The investment will be made in China, the world’s largest automotive market. The German company plans to build a research, development and production unit for components for vehicles that do not use conventional energy and have self-driving technology in Suzhou, a city in eastern China.
Seeds distributor Biochem in Constanta has finalized an organic grains silo in Tulcea
The company Biochem from Constanta, which distributes grain seeds, pesticides and fertilizers to Romanian farmers, controlled by Constantin Chimișliu, has finalized construction works on a center for the storage of organic grains in Lunca locality, Tulcea County. The investment amounted to EUR 1.1 million, half of which was ensured from European funds, agricultural engineer Constantin Chimișliu, who entered the pesticides trade in 1991, told Ziarul Financiar.
Nestlé Hungária will create 250 new jobs at its unit in Bük
Nestlé Hungária will create 250 new jobs at its unit in Bük, following a 140 billion forint (EUR 350.6 million) capacity expansion investment, Foreign Affairs and Foreign Trade Minister Péter Szijjártó has announced. According to the ministry’s press release, the Swiss company’s Central and Eastern European animal feed production center is in Hungary, where this development will increase production by 30% and is expected to take the export rate from 90% at present to over 95%.
Legislative 
Minister of Culture aims to change legislation based on which TNB director is appointed
The Minister of Culture has announced that he aims to change the legislation based on which the position of director of the National Theatre of Bucharest (TNB) is filled. He has pointed out that a theatre such as TNB cannot remain under interim management for too long. Minister Romașcanu has added that the "extensive" debate in Parliament will probably take place in March. Mr. Romașcanu has also indicated that the members of the ruling coalition agree with the change.
Government will approve draft decision to increase military and police rank pay
The agenda of the government meeting on Wednesday, 11 January included a draft decision through which the rank salary and the professional level salary earned by military personnel, police officers and prison officers will be updated in proportion to the evolution of the minimum gross basic salary in Romania. Another draft ordinance on the agenda of Wednesday’s meeting was the one amending Article 4(2) of Government Ordinance 26/1994 on the food rights, in peacetime, of national defence, public order and national security personnel and of persons deprived of liberty.
European News 
Lawmakers split over forestry in EU nature restoration law
The European Union aims to adopt a new regulation by the end of the year to restore natural ecosystems but several issues, including forestry, still create controversy among EU legislators. In June last year, the European Commission tabled a new Nature Restoration Law, which for the first time introduces legally-binding targets to restore degraded land and reverse biodiversity loss. The plan also includes a EUR 100 billion budget for EU member states to restore nature in agriculture, forests, oceans and urban areas.
Social 
"New Home" program will continue in 2023 with a RON 1.5 billion guarantee ceiling
The "New Home" program will continue in 2023 with a RON 1.5 billion guarantee ceiling, the Finance Ministry announced on Friday, adding that the project had been put up for public consultation. Financing is granted in RON, for the purchase of a single dwelling, and the maximum amount of the loan that can be accessed is EUR 66,500 - for residences that cost maximum EUR 70,000, with a required down-payment of 5% and EUR 119,000 - for dwellings whose maximum price is EUR 140,000, the required down-payment being 15% in this case.
Health Minister Alexandru Rafila expects an increase in the number of respiratory illness cases
Health Minister Alexandru Rafila expects an increase in the number of respiratory illness cases this week, after "little over 100,000 cases" were recorded last week, and he expects the situation to be on a downward trend towards the end of the month. The minister believes that the threshold of 170,000 new cases per week, reached during the flu epidemic of the 2018-2019 season, will most likely not be exceeded this season. He has also announced that since the INSP report on Thursday, which mentioned 15 deaths, there have been several more deaths caused by influenza, and the total number is "somewhere around 20 deaths".