Coronavirus – measures to support the economy

After years of growth, Romanian economy risks slowing down amidst reduced economic activity as a result of COVID-19 outbreak.

Bogdan Matei, 12.03.2020, 13:50

On
Wednesday Bucharest played host to the first meeting of a mixed institution
group charged with evaluating the economic, financial and budgetary effects of
the COVID-19 in Romania. Chaired by President Klaus Iohannis, the meeting
brought together National Bank Governor Mugur Isarescu and representatives of
the Government and the business sector. The President called for a careful and
responsible analysis of economic and social implications, at the same time
calling on all institutions to limit the economic impact of the
epidemic-generated crisis. Measures must factor in the interests of employees,
businesses and the budget, which entail various consequences and scenarios,
the President said. The President of the National Council of Small and
Medium-sized Enterprises, Florin Jianu, says that particular assistance must be
given to companies experiencing financial difficulties in the fields of
tourism, transports and car manufacturing.

In
these fields where we notice an immediate impact we can set up a system of
state allowances that should basically help companies pay their employees. The
Finance Minister has discussed the possibility of postponing by 1-2 months the
deadline for contributions. There have been several other proposals regarding
exports and various other fields. We all agreed that companies are facing a
shortage of orders and trade agreements, and therefore need working capital.
Working capital can be obtained by getting zero-interest loans, guaranteed by
the state, which means the state provides a fixed amount of money which is
multiplied to help several enterprises.

The
working group will analyse all measures tabled for discussion and will announce
which measures will be adopted next week. Economic pundits warn that, unless
swift measures are taken, the economy will suffer dramatically. Professor of
Economic Sciences Mircea Cosea told Radio Romania:

We
can expect a number of unpleasant effects, which are a result of what’s
happening in other countries and continents: enterprises shutting down their
activities, banks experiencing difficulties. There are many aspects that will
make the situation much worse, albeit we’re concerned only with the sanitary
side of things, so to say. We need to consider all the elements at work.
Unemployment is very likely to kick in, and we will soon see underperforming loans
that will not be refunded.

One
day before the vote of investiture for his Cabinet, the Prime Minister
Designate Florin Citu said Romania has the necessary resources and fiscal
instruments to deal with any challenge related to the spread of the
coronavirus. (translated by V. Palcu)