News

Daily Newsletter - 30 October 2017

Summary

FIC (2)

Bloomberg analysis: Romania can be the weakest link in the Central and Eastern Europe. Political babble and instability make their effects felt (Source: stiripesurse.ro)

The Foreign Investors Council (FIC) publishes twice a year the results of the Business sentiment index survey conducted among its members. Romania has an opportunity to build on the current economic growth and become one of the top 10 economies in the European Union in the next 20 years, but it has to do so wisely ensuring the sustainability of long-term investments and reforms. Constantly changing fiscal policy with measures being announced and then dropped has had a powerful negative effect on the trust of investors. Equally, perceived or real dangers for the rule of law in Romania, translate into less trust on behalf of investors. Last but not least some of the public discourse that tries to play foreign against local, large against small investors has lowered trust and increased uncertainty. Equally worrying are the increased number of instances when officials are using misleading or false information in order to slander certain industries or economic sectors.

Bloomberg analysis: Romania can be the weakest link in the Central and Eastern Europe. Political babble and instability make their effects felt (Source: activenews.ro)

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How Romanian workers have become the lab rats of the system. Vasile Georgescu, the head of the Retail trade unions: "We become the poor able to work, little by little" (Source: zf.ro)

The Romanian-American Trade Chamber (AmCham) and the Foreign Investors Council contend they have put pressure on the Romanian Government for a cheaper and more flexible labor force since 2011.

Gloomy conclusion in the foreign press: How Romanian employees have become Europe's guinea pigs (Source: diacaf.com)

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Macroeconomic News (4)

PWC: The increase in the minimum wage and the transfer of contributions from the employer to the employee entail an additional cost of RON 120 

Imposing an 1% turnover tax will particularly affect the low-profitability companies or those recording losses, while the increase in the minimum wage and the transfer of contributions from the employer to the employee entail an additional cost of RON 120 for employers, a PWC press release shows, cited by Agerpres.

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A sucky measure. How about the three years budget projection? 

The Government has announced its intention to raise deductions for the lowest wages by 70% in the package of fiscal measures for 2018. In the case of the minimum salary, the sum exempted from tax will increase from RON 300 to 510. For dependents (children mostly) the basic deduction will rise 60%, from RON 100 at present to RON 160.

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Florin Georgescu, NBR prime vice governor: No additional GDP growth is wanted if it brings macroeconomic imbalances 

No additional GDP growth is wanted if it brings macroeconomic imbalances and maintaining stability is an essential element for an emergent economy in the convergence process with the developed markets, Florin Georgescu, NBR prime vice governor, has said in a presentation held within conference "10 years since Romania's accession to the European Union: from cohesion to convergence".

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ANAT: The 1% tax on turnover worth up to 1 million euros affects over 85% of travel agencies 

Imposing the 1% tax on turnover worth up to 1 million euros affects over 85% of travel agencies, putting them in the situation of renouncing investments and business development, the representatives of the National Travel Agencies' Association (ANAT) say. "The travel industry waits for the approval by the Government of the regulations correcting the current situation of guaranteeing travel packages, for which ANAT has set out proposals since one year ago. Or stimulatory measures like VAT reduction at 9% for agencies' margin, ANAT has requested insistently for several years, should be proposed", ANAT shows in a press release sent Sunday.

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Financial News (3)

Raiffeisen: An ANPC order may increase the interests of the clients with mortgage-secured loans 

More than 70% of the clients with mortgage-secured loans granted between 2006-2010 should pay higher interests than at present, Raiffeisen Bank contends, in case the financial institution applied the provisions of a recent order of the National Consumer Protection Agency (ANPC).

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MUGUR ISARESCU: "The bank resolution scheme must be completed by a series of policies ensuring the adaptability of the banking system" 

The bank resolution scheme must be completed by a series of macroeconomic policies ensuring the adaptation capacity of the banking system, Mugur Isarescu, the governor of the National Bank of Romania (NBR), stated yesterday in a conference at the headquarters of the central bank.

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Blow for banks, NBFIs and leasing firms: they may no longer deduct the interests paid to the loans from the group. Tougher fiscal rules for the rest of firms too 

The rules basing on which all the companies paying a profit tax can deduct the interest expenses and losses from currency exchange differences to loans from associated entities are changed radically by the draft GEO amending the Fiscal Code as of 1 January 2018. Banks, NBFIs and leasing companies, which lose the advantage of unlimited deductibility they have enjoyed up to now, will be the most affected. The Government pretends it thus transposes the provisions of an European Directive, which actually recommends the maintenance of interest deductibility for the special case of financial institutions.

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Investment News (1)

Transgaz has signed the 50m euros loan from EIB for the project of the international gas pipeline BRUA 

The operator of the national natural gas transport system, Transgaz, controlled by the Romanian state through the Ministry of Economy, with more than 58% of shares, borrows 50m euros from the European Investment Bank (EIB) for funding the first stage of the project for building the Romanian section of the international pipeline BRUA. The loan was signed today, after being announced last week. Transgaz's application for the loan was approved by EIB in principle since December last year. The overall investment is estimated at 560m euros, out of which 179m euros will be covered by a grant awarded by the European Union.

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Legislative News (1)

The Law on lobby has remained at the stage of interest transparency register, optional for companies. The draft, discussed for two years, had to be completed in June 

The Law on lobby, which, pursuant to the governing program, had to be completed since June by the ministry for business environment, is not even a draft, according to an official document of the ministry. The Government takes into consideration only the foundation of a unique interest transparency register, proposal discussed with the business environment since 2015.

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Politics (2)

Paul Stanescu, about Ponta's statements about Dragnea: I regret what he is doing today 

Vice prime minister Paul Stanescu, leader of PSD Olt, stated Saturday, in Slatina, in a press conference, that he had been mistaken about the former prime minister Victor Ponta, he had accused of lying. Asked about his opinion regarding Ponta's recent statements about Liviu Dragnea, PSD Olt leader said he regrets "what Ponta is doing today".

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Nicusor Dan: The non-statutory cancellation of the elections from Bucharest has decided the USR leader. I left the party thinking I leave behind an organization of principled people 

The former leader of Save Romania Union writes Sunday evening, on Facebook, a new message challenging the Congress in which a new leadership of the party was elected, saying he left the party thinking he leaves behind an organization of principled people, that he appreciated those who told him straight they will vote for positioning within the referendum for family, that this is a decision in principle for them, and now he is "shocked" to see those people not reacting to abuse, illegality, denaturation of the purposes for which the organization was created. He also says that, although he is no longer in USR now, he has a responsibility towards the people who worked for the party and who tell him they can't bear the illegality and denaturation of USR goals any longer.

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