News

Daily Newsletter - 29 November 2021

Summary

Macroeconomic (3)
Financial (3)
Investment (3)
Legislative (2)
European News (1)
Social (2)
Macroeconomic 
The budget execution can fit within the new projected level of budget expenditures
The Fiscal Council considers that the budget execution can fit within the new projected level of budget expenditures and a budget deficit of 7.13% of GDP is feasible, following the analysis of the draft budget adjustment proposed by the new Government. Moreover, the Fiscal Council’s representatives expect the budget structure for 2022 to be a difficult test given the need to reconcile the management of the very difficult situations Romania is currently faced with (health crisis, energy price shock, effects of tensions on international markets), which require adequate resources, with the need for budget consolidation and for a visible reduction of the budget deficit.
Romania’s total external debt grew by EUR 36 billion, to EUR 134 billion, in four years
Romania is back in the spotlight among several international bankers due to the rapid and consistent increase in its external debt and its high fiscal and current account deficits. Japanese investment bank Nomura has included Romania among the emerging countries most at risk of facing an exchange rate crisis, along with Egypt, Turkey and Sri Lanka. Nomura’s analysis considered indicators such as external debt as a percentage of gross domestic product, the ratio of foreign exchange reserves to imports and stock market index. To be more exact, Nomura indicated that Romania had a high short-term external debt, low foreign exchange reserves and significant fiscal and current account deficits, according to the report drawn up by the Japanese giant and cited by CNBC. It is not clear whether Nomura’s analysis also considered the inflows of European funds into Romania, related to the National Recovery and Resilience Plan (PNRR).
Finance Minister signed the loan agreement through the Recovery and Resilience Facility
On Friday, 26 November, Finance Minister Adrian Câciu signed the approximately EUR 15 billion loan agreement through the Recovery and Resilience Facility concluded between the European Commission and Romania, the ministry’s representatives indicated. The loan will be used to finance the state budget deficit and to refinance government public debt, based on budget expenditures made for the reforms included in the National Recovery and Resilience Plan (PNRR).
Financial 
Uniqa Asigurări has received ASF’s approval to exit the RCA market
Uniqa Asigurări, part of the Austrian group Uniqa, has received the Financial Supervisory Authority (ASF)’s approval to exit the mandatory civil liability car insurance (RCA) market, after City Insurance had entered bankruptcy proceedings, and the RCA segment entered a turbulent period, with rate increases. The companies that will remain on the RCA market are Euroins, Allianz-Ţiriac, Omniasig, Asirom, Grawe, Groupama and Generali. The seven players ended H1 of 2021 with a cumulated volume of subscriptions of RON 1.19 billion, representing 53% of the total volume of subscriptions on the RCA market of RON 2.25 billion.
The Ministry of Finance will grant CEC Bank a RON 1.4 billion subordinated loan
The Ministry of Finance, as a shareholder, will grant CEC Bank a RON 1.4 billion subordinated loan for the bank’s capitalization, in line with the minimum requirement for own funds (capital) and eligible liabilities (debts) (MREL requirement established by NBR), according to a Government Emergency Ordinance (OUG). Considering the needs for development and diversification of products and services offered by CEC Bank, the Romanian state, through the Ministry of Finance, finalized CEC Bank S.A.’s recapitalization project, with RON 940 million, in November 2019. The main activity objectives for the period 2020-2023 have been established in accordance with the share capital increase. CEC Bank thus proceeded to the corresponding review and expansion of its Development Strategy.
George, the first smart banking in Romania, is now available for micro-enterprises and SMEs as well
George, the first smart banking in Romania, launched by BCR, has been officially launched for business clients and aims to be a partner of Romanian entrepreneurs in the world of digital smart business, according to a press release issued by the bank. George transfers the complete digital experience, which it has accumulated in the three years since its implementation in Romania and which it offers to the 1.3 million retail clients, onto the business environment. The platform thus provides entrepreneurs with an ecosystem of functionalities that will help them have better control of their business in a simple, fast and modern way.
Investment 
GEFCO will install 290 charging stations for electric vehicles in its logistics centers in Europe
GEFCO, a global solutions provider for the industrial supply chain and a European leader in automotive logistics, has reached the final stage of a project through which it will install 290 charging stations for electric vehicles in the Group’s logistics centers in Europe. These customized unique systems, manufactured by e-Totem, will help automotive manufacturers and authorized distributors charge the vehicles before delivering them to end customers, according to a press release.
Transgaz has signed a RON 220 million loan agreement with BCR
Transgaz has signed a RON 220 million loan agreement with Banca Comercială Română over a 12-year crediting period to finance several investments in the natural gas transport network in the north-east of Romania. Transgaz will thus improve the area’s natural gas supply and will ensure the transport capacities to/from the Republic of Moldova, according to an announcement published at Bucharest Stock Exchange. The company has reported a net profit of RON 112 million for the first nine months of 2021, down by 45%, and RON 954 million revenues from operating activities, 5% lower than in the similar period of 2020.
Flanco has reached a network of 160 units following the latest openings
Flanco continues its efficient expansion strategy by choosing high-traffic shopping centers for its new stores in Arad and Bârlad, according to a press release. With the new openings, the retailer has reached a network of 160 units, located in 112 cities in the country. The investment in the two stores amounted to approximately RON 1.5 million.
Legislative 
President Klaus Iohannis has promulgated a new law
On Friday, 26 November, President Klaus Iohannis promulgated the law approving Government Emergency Ordinance (OUG) 138/2020 amending and completing OUG 118/2020 on the approval of the "SME LEASING FOR EQUIPMENT AND MACHINERY" program, aimed at supporting small and medium-sized enterprises, according to the Presidential Administration. This law clarifies the definitions regarding the beneficiary of the program, the guarantee contract, the financial leasing financing and financial leasing and establishes the competences for recovering the receivables resulting from the payment of guarantees issued for the financing granted within it.
The descendants of soldiers killed in missions will receive a monthly allowance
On Friday, 26 November, President Klaus Iohannis promulgated the law eliminating the condition of an income below 50% of the average gross wage for the provision of the monthly allowance to the descendants, children and surviving spouses of soldiers who died in the line of duty. The normative act amends Law no. 168/2020 recognizing the merits of personnel participating in military actions, missions and operations on the Romanian state’s territory or outside of it and granting rights to the aforementioned personnel, their families and the descendants of the deceased.
European News 
EU has put in place reforms to try to build a seamless securities market
The European Union set out its third wave of reforms in six years on Thursday, 25 November, to try to build a seamless securities market that can compete better with London and New York, a step that will pit stock exchanges against rival platforms. The EU project to create a capital markets union (CMU) suffered a blow when Britain and its large financial sector left the bloc.
Social 
The fifth wave of the Covid-19 pandemic will affect Romania after mid-January
Health Minister Alexandru Rafila has stated that the fifth wave of the Covid-19 pandemic will affect Romania after mid-January, when the infections contracted during the winter holidays period will show their effects. Mr. Rafila has called on people who have elderly relatives to try to convince them to get vaccinated against COVID-19 before the winter holidays, because, this way, the holidays will be more relaxed and peaceful in most families in Romania.
Prime Minister is preparing measures to prevent the spread of South African variant of Covid-19
Prime Minister Nicolae Ciucă has stated that he will discuss with decision-makers in Romania and will announce, as soon as possible, the necessary measures to prevent the spreading of the South African version of SARS-CoV-2. The Prime Minister has also said that he took note of the European Commission and the World Health Organization’s latest recommendations.