News

Daily Newsletter - 6 June 2022

Summary

FIC (2)
Macroeconomic (4)
Financial (4)
Investment (4)
Legislative (3)
European News (1)
Social (2)
FIC 
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.

Report: The taxes paid by the FIC member companies have a significant direct contribution to supporting the State budget

Energy puts Romania in a difficult situation

FIC calls for stable and predictable fiscal system in Romania

FIC supports a stable and predictable financial system in Romania

FIC calls for stable and predictable fiscal system in Romania

FIC requires a stable and predictable tax system in Romania

FIC supports a stable and predictable financial system in Romania

FIC supports a stable and predictable financial system in Romania

Report: The taxes paid by the FIC member companies have a significant direct contribution to supporting the State budget

The solidarity tax could return starting from 2023
The introduction of taxes in a timely manner, although not a singular case, without an analysis of both the direct impact and the compatibility of European legislation and possible subsequent reactions, instead of stimulating the economy to generate additional revenue to the budget, penalizes exactly those segments of companies that comply and have managed to perform in restrictive sanitary conditions. Most of the time, making such decisions without a real consultation with the business environment, without a transparent dialogue and a reasonable period of adjustment will not have the expected effect, and the negative impact on Romania's image are very difficult to regain.
Macroeconomic 
Romania needs to reduce the number of counties to 15 to reduce budget spending
The representatives of the Chamber of Commerce and Industry of Romania (CCIR) believe that Romania’s total territorial reorganization by reducing the number of counties to 15 is a priority in order to reduce budget expenditure. According to the cited source, CCIR organized a working meeting with important employers’ and sectoral professional organizations in Romania. Talks focused on the current economic situation, the possibilities for developing and promoting Romanian products and services and ways of reducing public spending.
Food prices at global level decreased once more in May 2022
Food prices at global level decreased once more in May 2022, by 0.6%, following a 0.9% decline in the previous month, according to the latest report from the Food and Agriculture Organization of the United Nations (FAO). The global annual increase in food prices became more moderate, having got to 22.8%, from 29.7%, amid a significant monthly decrease in oil and dairy prices.
Retail sales increased in Romania
Retail sales in the European Union and the euro area fell more than expected in April, amid a drop in food sales, according to data published by Eurostat on Friday. The data also indicate that retail sales fell by 1.3% in both the euro area and the European Union in April 2022 compared to March 2022. Economists interviewed by Reuters had bet on a 0.3% month-on-month increase in euro area retail sales, after having recorded an advance in each of the first three months of the year. Eurostat points out that retail sales in the EU were influenced by a 2.3% drop in sales of food products, beverages and cigarettes, as well as by a 0.9% fall in sales of non-food products. In contrast, fuel sales grew by 1.4% month-on-month.
Retail trade turnover grew by 5% as a gross series during the period 1 January - 30 April 2022
Retail trade turnover grew by 5% as a gross series during the period 1 January - 30 April 2022, compared to the similar interval of 2021, following an increase in retail trade in motor fuels in specialized stores (+10.2%), in sales of non-food products (+6.6%) and sales of food, beverages and tobacco (+0.6%). Moreover, working-day and seasonally adjusted retail trade turnover recorded an overall year-on-year advance of 6.9% during the period 1 January - 30 April 202, following the increases in retail trade in motor fuels in specialized stores (+10.1%), sales of non-food products (+6.7%) and sales of food products, beverages and tobacco (+4.6%).
Financial 
Tiberiu Mavrodin has been proposed to take over the helm of CEC Bank’s Board of Directors
Tiberiu Mavrodin, a member of CEC Bank’s Board of Directors, has been proposed to take over the helm of the Board of the bank controlled by the state, through the Ministry of Finance, thus taking over from Mirela Călugăreanu, the former president of the National Agency for Fiscal Administration (ANAF), according to banking sources. Such an appointment becomes official through a memorandum of the Finance Minister that needs to be approved in the government. Mr. Mavrodin would thus return to this position he had filled before, after Radu Ghețea had stepped down from CEC Bank’s helm, after more than a decade. Tiberiu Mavrodin was previously a secretary of state in the Ministry of Finance and head of the State Treasury during the Social Democratic (PSD) governing.
Most large banks reported higher year-on-year profits for Q1 of 2022
Most large banks reported higher year-on-year profits for Q1 of 2022, amid the growing lending and the rising revenues following the increase in interest rates, but also as a result of lower risk costs and provisions. The three most profitable large banks in Q1/2022 were BCR, Banca Transilvania and ING Bank, with over RON 1 billion gains altogether, which represents half of the system’s total profit.
Banca Transilvania to start integrating Ţiriac Leasing into Banca Transilvania Financial Group
Banca Transilvania will start integrating Ţiriac Leasing into Banca Transilvania Financial Group after receiving the necessary approvals for this transaction, which represents the first acquisition by BT of a leasing company that is not part of a financial-banking group. The bank claims it is thus taking a strategic step towards strengthening its position on the automotive leasing market. In January, BT and Țiriac Group announced the signing of the acquisition agreement, then the Competition Council’s approval was received, and, once the transaction is concluded, BT will start integrating Țiriac Leasing into Banca Transilvania Financial Group, according to information provided by the bank.
Euroins reached EUR 83.3 million gross underwritten premiums in Q1/2022
Euroins, the new leader of the insurance market in Romania, part of the Bulgarian group Eurohold, ended the first quarter of 2022 with EUR 83.3 million gross underwritten premiums, double the level recorded in the same period last year, according to Eurohold’s quarterly report. The company’s gross profit grew 14-fold in Q1/2022, to EUR 7.2 million. As to the company’s activity on the local market, the mandatory civil liability car insurance (RCA) segment continued to account for 96% of the company’s portfolio, with a 140% increase in underwritten premiums in the first three months of 2022.
Investment 
The plant of the Swiss from Clariant has been officially opened
A ten-hectare plant in the south of Romania, a few kilometers away from Craiova, 22 processing units, 40 kilometers of pipes and 350 kilometers of cables - the equivalent of the distance between Bucharest and Craiova - these are some of the figures behind the over EUR 100 million investment of the Swiss from Clariant in the bioethanol (fuel for the automotive industry) plant, officially opened three years after the start of construction works. The tanks that actually produce the bioethanol which gets to gas stations are already busy, and the chemical processes take between 50 and 100 hours each.
Agroland Business System to invest over EUR 2 million in opening Agroland MEGA stores
Agroland Business System (Bucharest Stock Exchange symbol: AG), a Romanian retail, agricultural and food entrepreneurial group, is to invest more than EUR 2 million in the opening of Agroland MEGA stores, EUR 1 million in increasing the capacity of the farms in Mihăilești and more than EUR 1 million in the recently acquired feed plant in Caransebeș. Horia Cardoș, founder and general manager of the Agroland network, says that 2022 is a year of rebalancing compared to 2021, and that Agroland aims to become one of the top five national eggs and chickens producers.
CrisTim Group to invest RON 50 million in refurbishment of meat products plant in Prahova
CrisTim Group, one of the biggest producers of meat products in Romania turnover-wise, controlled by Radu and Cristina Timis, is to invest RON 50 million this year in the refurbishment of the meat products plant in Filipeștii de Pădure locality, Prahova County, in increasing the accommodation capacity of Casa Timis mansion in Chitorani locality, the same county, and in the production of energy for its own consumption. In 2021, CrisTim had a consolidated turnover of RON 760 million and about 2,600 employees.
Ford Motor will invest USD 3.7 billion in the USA
Ford Motor will invest USD 3.7 billion in the production of electric vehicles and gasoline-powered vehicles at assembly plants in Michigan, Ohio and Missouri. The company has indicated that USD 2.3 billion of the total investment will be spent on electric vehicles, as part of the USD 50 billion in EV spending through 2026 it had previously outlined. Company officials have stated that Ford will receive incentive packages of about USD 150 million and about USD 200 million from Michigan and Ohio, respectively. As part of the investment, the Michigan-based automotive manufacturer has indicated that it will add more than 6,200 hourly jobs and convert 3,000 temporary workers into full-time employees who will receive healthcare benefits and higher salaries.
Legislative 
Law sanctioning public incitement to violence, hatred or discrimination has been promulgated
On Friday, President Klaus Iohannis promulgated the Law amending Article 369 of Law 286/2009 on the Criminal Code, which sanctions public incitement, by any means, to violence, hatred or discrimination because of the phrase "political affiliation or opinion". The draft law had been challenged at the Constitutional Court of Romania (CCR) by Save Romania Union (USR), but the constitutional judges ruled that the law was constitutional. Laura Vicol, the chairman of the Chamber of Deputies’ Legal Affairs Committee, has stated that the draft law transposes an article of the Framework Decision 2008/913/JHA on combating certain forms and expressions of racism and xenophobia by means of criminal law into Romanian legislation.
Senate’s Committee of Inquiry into Child Abuse has initiated two draft laws
The Senate’s Committee of Inquiry into Child Abuse has initiated two draft laws, necessary and urgent steps for the safety of children and young beneficiaries of the special protection system, the chairman of the committee, Liberal (PNL) Senator Alina Gorghiu announced on Friday. The first draft law targets post-institutionalization monitoring of young people leaving the special protection system, yet only with their consent, for a period of two years. The second draft law aims to amend and complete the Criminal Procedure Code in order to protect institutionalized children from further trauma during court hearings.
USR has tabled a legislative initiative to improve data collection by INS
Save Romania Union (USR) senators have submitted a legislative initiative introducing the collection of data by the National Institute of Statistics (INS), its territorial directorates and other official statistics producers directly from authorities and public institutions that have already collected such data necessary to INS, in their current activity, as a general rule. According to the draft law, only when the necessary data is not available at authorities and public institutions, can the INS and its territorial directorates, as well as other statistics producers request such data from providers defined by law as natural or legal entities that have the obligation to provide such data for statistical purposes exclusively.
European News 
Romania buys fossil fuels from Azerbaijan
Energy Minister Virgil Popescu is trying to persuade Azerbaijan to increase oil and gas deliveries to Romania in an attempt to diversify Romania’s energy resources as Bulgaria-Greece gas interconnector needed for LNG supply nears completion. Romania is not as dependent on Russian fossil fuels as other European countries, but imports still account for almost one-third of its energy consumption, with Russia covering about a quarter of the natural gas needs and one-third of the oil used in Romanian refineries. Even before the Russian invasion of Ukraine, energy officials from Romania started to look for alternative suppliers of gas around the Black Sea and Caspian region and in the Middle East, but no deals have been announced so far.
Social 
Hourly labor cost adjusted by the number of working days grew by 8.84% in Q1/2022
The hourly labor cost adjusted by the number of working days grew by 8.84% in Q1/2022 year-on-year, and decreased by 0.47% compared to Q4 of 2021, according to data published by the National Institute of Statistics on Friday. The most significant YoY increases in hourly labor costs adjusted by the number of working days in the first three months of 2022 were recorded in other service activities (17.23%), information and communication (16.84%) and hotels and restaurants (15.20%). A decrease in hourly labor costs adjusted by the number of working days was only recorded in education (-3.12%).
More than 12,000 children had both parents working abroad at the end of September 2021
The total number of children in Romania with both parents working abroad stood at 12,286 at the end of last year, 53 fewer than at the end of Q3/2021, according to data centralized by the National Authority for the Protection of Children’s Rights and Adoption (ANPDCA). On the other hand, the number of children with one parent working abroad grew to 76,170 at the end of December (2,783 more children than on 30 September 2021). Of the 12,286 children with both parents working abroad, 11,476 were in the care of up to fourth degree relatives, without any protection measures, while the rest had been placed in foster care, in placement centres or with other families or individuals.