Daily Newsletter - 3 June 2022


FIC (2)
Macroeconomic (3)
Financial (3)
Investment (3)
Legislative (2)
European News (1)
Social (3)
Budgetary challenges must be addressed through sustainable measures for economy

The stability and predictability of the tax system must be a priority for the authorities in order to maintain a strong and attractive business environment. Only in these conditions will the private sector be motivated to continue investing in our country and to provide jobs for its citizens. Any change in the fiscal framework without impact assessments and dialogue with the business community, could compromise the potential for economic development, which is mainly based on attracting foreign direct investment. As resulted from the latest FIC Study, the taxes paid by the FIC member companies have a significant direct contribution to supporting the State budget, the economic growth registered in Romania, as well as to building wealth. The results show a detailed picture of the major contribution of large Romanian companies with foreign capital to the state budget, the most important indicator being the level of VAT collection, which is the highest. The report/study provides details regarding the contribution of a representative sample of Romanian companies with foreign capital to tax revenues through the level of taxes paid to the state budget.

FIC: Budgetary challenges must be addressed through measures that are sustainable for the economy.

Press release: Foreign Investors Council - FIC

Report: Stability and predictability of the tax system must be a priority for the authorities to maintain a strong business envi

FIC: Romania is in a difficult economic context generated by developments in the energy market

FIC: Stability and predictability of the tax regime must be a priority in order to maintain a strong business environment

FIC: Budgetary Challenges Require Sustainable Measures For Romanian Economy

FIC: Bugetary challenges must be adressed through measures that are sustainable for the economy

FIC Business Sentiment Index, Spring edition

The Foreign Investors Council published the Business Sentiment Index (BSI) results for the latest edition, spring 2022. The survey shows that there is a moderate optimism among investors, however it is impacted by uncertainty and current challenges such as: energy market crisis, military conflict in Ukraine, inflationary pressures affecting supply chains and customer demand, including the erosion of end-user disposable income, which possible effects were highlighted in the May edition of the Inflation Report published by the National Bank of Romania (NBR). Companies want to invest in Romania, half of the respondents estimate that for this year the planned investments are at similar levels to last year, and 40% of respondents say they plan to invest larger amounts compared to the previous period. have plans to expand their workforce and 37% keep these plans for the next 12 months at levels similar to last year. The sentiment remains that there is a need for labor, but unfortunately the perception of the availability of adequate staff remains reserved, only 45% of respondents believe that labor force is competitive. Reforms are still needed in key areas such as infrastructure, transparency, and coherence in the application of public policies, reducing bureaucracy and the burden of regulations. .

FIC Business Sentiment Index, Spring edition

Industrial producer prices grew by 47.1% in April 2022
Industrial producer prices (domestic and external market) grew by 47.1% in April 2022 compared to the same month of last year, according to data published by the National Institute of Statistics (INS) on Thursday. Moreover, overall industrial producer prices (domestic and external market) were down 1.9% in April 2022 against the previous month. According to the cited source, the industrial producer prices at domestic market level decreased by 3.2% in April compared to March 2022, and were up 60.38% year-on-year. Furthermore, prices on the external market rose 1.27% (compared to March 2022) and recorded a 24.25% year/to/year advance.
BAT contributed EUR 125 billion to the Romanian state budget
BAT, a company controlling 50% of the Romanian tobacco market, generated an impact of over EUR 125 billion in economy in the 25 years of presence on the local market. Of this sum, about EUR 24 billion was the direct contribution to the state budget in the form of taxes, excise duties, salaries and other local charges, the company announced. The analysis of the company’s economic impact during the period 1996-2020 was carried out by the independent consultancy and market research group CIVITTA.
Romania does not meet any of the conditions needed for the adoption of the euro
Romania does not meet any of the conditions needed for the adoption of the euro, the European Commission concluded, following its assessment on legal compatibility and the fulfillment of the convergence criteria, and taking into account the additional relevant factors, according to a press release published by the European Commission on Wednesday. The conclusion was presented in the 2022 Convergence Report, which assesses the progress made by Bulgaria, the Czech Republic, Croatia, Hungary, Poland, Romania and Sweden towards joining the euro area.
Banca Transilvania will implement a stock option plan for management and employees
Following the resolution of the Extraordinary General Meeting of Shareholders at Banca Transilvania (stock exchange symbol TLV) on 28 April 2021 and the resolution of the Extraordinary General Meeting of Shareholders on 28 April 2022, the crediting institution unanimously approved the purchase by the company, from the capital market, of own shares as part of a stock option plan, according to a document published at Bucharest Stock Exchange. The decision targets the implementation of a remuneration system and of a staff retention program for at least three years, as well as the payment of fixed remunerations.
NBR’s foreign exchange reserves grew by EUR 419 million in May, compared to April
The National Bank of Romania (NBR)’s foreign exchange reserves grew by EUR 419 million in May, compared to April, to EUR 40.9 billion, following EUR 3.75 billion inflows and EUR 3.33 billion outflows. The EUR 3.75 billion inflows in May represented changes in credit institutions’ foreign currency-denominated required reserves with the NBR; inflows into the Ministry of Finance’s accounts, including the amount resulting from the Ministry of Finance’s Eurobond issue with a nominal value of USD 1.75 billion, inflows into the European Commission’s account and other, according to data transmitted by NBR on Thursday.
Eurohold, Euroins Romania’s parent-company, recorded EUR 853 million revenues in Q1/2022
Eurohold, the Bulgarian group present in Romania through Euroins Romania, ended the first three months (Q1) of 2022 with four times higher revenues than in Q1/2021, of EUR 853 million, while its operating profit grew ten times during the same period, to EUR 45 million, according to the information provided by company representatives. The increase in the Bulgarian group’s revenues was mainly due to the consolidation of the results of former CEZ group’s subsidiaries in Bulgarian, which were acquired by Eurohold in July 2021.
Coca-Cola HBC Romania plans to make a new strategic investment in local operations
Coca-Cola HBC Romania, the leader of the beverages industry, plans to invest over EUR 8 million in local operations in order to support the company’s global commitment to reduce emissions to net zero by 2040. The targeted project will be carried out at the plant in Ploiesti - Coca-Cola HBC Group’s biggest plant in south-eastern Europe - and involves installing a PET flake decontamination piece of equipment. The project, which had already been planned by the company, was accelerated by the provision of a state aid scheme by the Romanian state, through which Coca-Cola HBC Romania was able to access EUR 3.5 million co-financing. Financial consultancy firm EY Romania supported Coca-Cola HBC Romania in accessing this state aid scheme.
Romgaz commissioned Coșereni drying station with three new wells
Energy Minister Virgil Popescu announced on Thursday that Romgaz had commissioned the drying station in Coșereni, with three wells having been put into operation. Virgil Popescu has explained that the investment had amounted to RON 31 million and generated an additional supply of 230,000 cubic meters of natural gas per day. According to him, Romgaz has put into production 14 new exploitation wells since 2021 up to present.
Used Products is consolidating its presence on the Romanian market
The local subsidiary of Dutch retailer Used Products, which specializes in the sale of new and pre-used products, is consolidating its presence on the Romanian market and announces an expansion plan targeting the opening of several franchise stores in the following years. The company aims to expand in cities with a population of over 50,000 inhabitants. Used Products currently has three franchise stores in Romania: the first one was launched in 2018 in Cluj-Napoca, the second one was inaugurated last year, in Timisoara, and the third one was opened in February 2022, in Bucharest. The last inauguration also marked the company’s entering the market in Bucharest. The new unit is located in Calea Moșilor area and spreads on about 100 square meters, most of which, namely 80 square meters, are allocated for customer interaction. The investment in this case amounted to about EUR 60,000.
Ministry of Justice sent for approval two draft laws on Criminal Codes
On Thursday, the Ministry of Justice sent to the Government, for approval, the two draft laws on the Criminal Codes, which bring the legislation in line with the Romanian Constitution, as interpreted by the Constitutional Court’s decisions, according to a press release issued by the ministry. The Ministry of Justice had sent the two draft laws to the Superior Council of the Magistracy (CSM), requesting its opinion, which was issued on 1 April, according to the press release, and some of the comments received from CSM were incorporated into the draft laws.
Government has regulated the efficiency of metropolitan areas
On Thursday, the Government approved, upon the Ministry of Development’s proposal, a draft law establishing the institutional framework, objectives, competences, financing and specific instruments of the metropolitan development policy in Romania, Minister Cseke Attila has announced. According to the normative act, the metropolitan area is defined in the Administrative Code by introducing the concept of metropolitan territory as the territory around cities, within which mutual relations of influence are created in the communications, economic, social, cultural and building infrastructure sectors.
European News 
Several amendments have been submitted to future law on artificial intelligence
Each political group of the European Parliament submitted a few hundred amendments to the upcoming AI Act, setting the tone for future discussions. The amendments, thousands in total, prelude complex negotiations that are set to start before the summer, during which the co-rapporteurs Brando Benifei for the internal market committee (IMCO) and Dragoș Tudorache for the civil liberties committee (LIBE) will seek to reach a majority via compromises. According to a European Parliament official, the MEPs in the two leading committees are almost equally split around the centre-right and centre-left axis, and on the most controversial points, it will be a "calculation game".
19% of employees in Romania work from home exclusively
About two out of ten employees in Romania (19%) currently work remotely exclusively, 29% work only from the office, and the rest benefit from the hybrid system, according to a PwC report. The work system has a major impact on employees’ satisfaction. Those working remotely exclusively are more concerned about the lack of career development opportunities than those working within a hybrid system or from the office. Moreover, those who cannot work remotely, mainly because their work can only be done at the office, have a lower level of job satisfaction.
Education is the area where Romanians most want the state to increase spending
Most Romanians believe that the education system favors students from privileged environments, and equity issues "combined with the presence of a strong connection between education level and income, the highest one of all EU countries, partly explain the major and growing gap between rural and urban areas", according to a report published by the Friedrich Ebert Stiftung foundation this week, based on a survey conducted in Romania at the end of last year. Teachers’ quality, along with students’ effort are considered to be the most important factors influencing students’ success, while perceptions regarding private lessons vary the most among the different categories of respondents. Overall, education, closely followed by healthcare, is the area where most Romanians want an increase in state spending.
Government approves RON 700 aid for people with low pensions
During the meeting on Thursday, the government adopted a Government Emergency Ordinance for the provision of RON 700 financial support to all pensioners in the public and military system whose pensions are under RON 2,000 per month. The Labor Minister has indicated that the measure is part of the Support for Romania Package, which also includes, among other things, the granting of electronic vouchers worth RON 250, once every two months, i.e. four times this year, to people with low incomes.