The major bets for Romania’s economy in 2022 are related to the 4.6% economic growth which the government counts on and which it has built this year’s budget on. Revenues must grow by 13%, on an 11% increase in budget expenditure, so that the budget deficit should reach 5.84% of GDP. According to Ziarul Financiar, 2022 is a complicated year for the Romanian economy. After a 2021 in which economy performed much above the expectations from the beginning of the year, a complicated 2022 will follow because the economic upturn has come at a price, namely the increase in twin deficits (trade deficit with an impact on the current account deficit and budget deficit).
Romanian Prime Minister Nicolae Ciucă pointed out, on the occasion of the 15th anniversary since Romania’s accession to the European Union, that the country’s Gross Domestic Product had tripled in this period and GDP per capita had grown almost four times from 2006 until 2021. The Prime Minister also indicated that European funds worth tens of billions of euros had entered Romania and continued to arrive into the country, contributing to investments that had increased the quality of living and had brought Romania closer to the Western standards it related to, while another over EUR 90 billion would be made available by the European Union in the following years through the National Recovery and Resilience Plan and the multiannual financial framework.
The Ministry of Finance (MF) plans to borrow RON 4.4 billion from commercial banks in January 2022, of which RON 300 million through an issue of discount treasury bills and RON 4.1 billion through ten government securities issues. RON 615 million through additional sessions of non-competitive offers, related to bond auctions, can add to these sums. The total amount of RON 5.015 billion is RON 1.595 billion higher than the RON 3.42 billion scheduled in December 2021, and will be used to refinance public debt and to finance the state budget deficit.
Romania will receive another EUR 1.9 billion at the beginning of this year, representing the pre-financing of the loan granted under the National Recovery and Resilience Plan (PNRR), after the targets and milestones corresponding to 2021 have been met. According to a press release issued by the Ministry of European Projects and Investment (MIPE) on Friday, the year 2021 was the starting point for the National Recovery and Resilience Plan in the development of the institutional and legislative architecture necessary for the implementation of this new financial instrument, both for Romania and at European Union level.
Signal Iduna remained the leader in the ranking of health insurance companies in the first nine months of 2021, with a volume of gross underwritten premiums of RON 98.8 million, up by only 1.1% compared to the same period last year, according to the Financial Supervisory Authority (ASF) report for the first nine months of 2021. Although Signal Iduna leads this ranking, Allianz-Tiriac, which ranks second in the classification, is approaching the leader’s level of gross written premiums. Thus, at the end of the first nine months of 2021, Allianz-Tiriac reached RON 95.5 million underwritten premiums, up by 4.9% year on year.
Borrowers who chose to have the payment of their loan instalments deferred have a higher credit risk given their higher debt level. Data show that the non-performing loans (NPL) rate for mortgage loans was 4.9% in September, up by 3.7% compared to mortgage loans whose payment was not deferred. Moreover, the NPL rate for consumer loans stood at 14.9%, 9.8% higher than in the case of non-deferred loans, according to NBR’s latest Financial Stability Report. The NPL rate for the overall banking system, for both retail and corporate loans, was 3.7% in September 2021, and the NPL rate in the case of loans contracted by the population stood at 3.3%.
The biggest courier companies invested in the construction of new warehouses or in the expansion of already existing ones, in order to improve delivery rates, and estimated double-digit increases in turnover in 2021, according to company officials. The provision of courier services has been one of the most dynamic sectors during the pandemic period, e-commerce having been the main growth drive. FAN Courier, the leader of the local courier market, with a RON 1 billion turnover in 2020, made significant investments in its own warehouses in the most important transit points, according to officials.
Players in the electrical household appliances industry have invested more than EUR 200 million in production in Romania over the past three years, the money having gone to three new units, an acquisition and the expansion of several already existing facilities. The local market has caught the eye of both new companies and manufacturers that had already been active at local level thanks to its favourable geographical position and well-trained workforce, which remains cheaper than in the West. The fact that some companies already had investments here and therefore experience was also an important aspect. Arctic and Karcher are some of the players to have bet on new production facilities in the past few years, each company having opened a second plant in Romania. Moreover, the Italians from De’Longhi have recently bought a plant, and other companies such as Electrolux have invested in the expansion of existing facilities.
Seven deputies from the Democratic Union of Hungarians in Romania (UDMR) have initiated a draft law amending and completing Law 272/2004 on the "protection and promotion of children’s rights", aimed at protecting children against "the dissemination, through any means, of content concerning deviation from the gender established at birth or the popularization of sex change or homosexuality". Moreover, the draft law also stipulates that education for life programs, including sexual health education for children, should be carried out at least once per semester, in order to prevent sexually transmitted diseases and under-age pregnancy.
The European Union has drawn up plans to label some natural gas and nuclear energy power plants as "transitional" or "green" investments provided they meet specific criteria such as displacing more polluting coal plants. The European Commission is expected to propose rules in January deciding whether gas and nuclear projects will be included in the EU "sustainable finance taxonomy". This is a list of economic activities and the environmental criteria they must meet to be labelled as green investments. By restricting the "green" label to truly climate-friendly projects, the system aims to make those investments more attractive to private capital.
2022 will bring an increase in the minimum wage in economy, in the pension point and in children’s allowances in Romania, but electricity supplied within the universal service regime and fuels have become more expensive since 1 January 2022. The gross minimum wage will thus be RON 2,550 in 2022, up by 10.8% against 2021. The pension point will grow by 10%, to RON 1,586, and the minimum social allowance will increase to RON 1,000. The state allowance for children aged 2 to 18, as well as for young people over 18 attending high school or vocational schools until they complete their studies, including those with disabilities attending a form of pre-university education stipulated by law, but no later than their 26th anniversary, will be incremented to RON 243. Excise duties will slightly grow starting from this year, being indexed to inflation, for almost all categories of products. Cigarettes are the only exception; in their case, the excise duty will remain at RON 563.97 per 1,000 cigarettes.
The furlough paid by the state expired on Friday, 31 December 2021. The Ministry of Labour had initially prepared a draft law, sent it to the Social and Economic Council (CES) and subsequently withdrew it. Several days ago, he sent another slightly modified document instead, but an opinion could not be issued during the Social and Economic Council meeting because two opinions were missing, that of the Ministry of Finance and that of the Ministry of Justice. Specialists say the new draft law could be adopted at the beginning of the current year.