Measures to Support Romanian Economy
On Thursday, the Romanian Government took several measures aimed at supporting the economy
Newsroom, 19.03.2020, 14:00
The measures taken by the Romanian Government on Thursday target both the companies that are directly affected by the restrictions imposed and those that feel the effects of the change in peoples lifestyles, triggered by the Covid-19 pandemic. Here is PM Ludovic Orban speaking of these decisions:
“We have decided to increase the loan guarantee ceiling for SMEs through the Guarantee Fund. In the first stage, this means an increase of 5 billion lei. We are ready to supplement it by another 5 billion, if need be. We are also ready to go as up as 15 billion, if necessary. In fact, we guarantee investment loans and working capitals. The interest for both products is 100% subsidized.”
The Prime Minister has stated that the guarantee is 90% for loans up to one million lei, and 80% for those that exceed one million. The Government has also decided to ensure the VAT refund up to the limit of 9 billion lei, in order to ensure capital injections into companies. Also, the budget will be adjusted to increase allocations for medical leave refunds, as there are also many delays from last year. The Romanian Government has also decided to ensure the payment of the workers who are furloughed, from the Labour Ministrys budget. Ludovic Orban:
“Weve made this decision because its quite obvious that many companies are affected by the pandemic, directly or indirectly, and many companies, as their revenues have diminished, do not have enough cash to cover the payment of salaries, so their employees run the risk of becoming unemployed. The decision is to pay 75% of the gross salary from the unemployment fund, which is actually the monthly benefit for furlough, but no more than 75% of the average gross salary.”
The measure is aimed at helping two categories of employers. One category is represented by those who are directly affected by the restrictive emergency measures taken by authorities, such as hotels, restaurants, coffee shops, entertainment institutions, which were force to suspend their activities. The second category is that of companies that are affected by the consequences of the pandemic as such. They will have to file a self-declaration form and prove their turnover has reduced by a minimum of 25%, the PM has said. He has explained that, if the Government had supported the payment of salaries at a certain quantum, that would have forced the employees to go to work, which in turn would have increased the risk of contamination.
The measures have been taken against the background of several companies in Romania announcing they are suspending their activity for an indefinite period of time, in order to protect their employees. The Dacia carmaker, for instance, which is part of the French Group Renault, has decided to stop manufacturing in Mioveni, in southern Romania, until April 5th, and therefore 13,500 employees have been furloughed. Ford, too, which has a factory in Romania, has made a similar decision, and has announced that the employees will get 78% of their base salaries. Ford has decided to stop all manufacturing activities in Europe, given the dramatic impact that the crisis has had on the European automotive industry and suppliers. The Italian company Pirelli, which has a factory in Slatina, in southern Romania, has too decided to temporarily suspend their activities, and the decision is affecting some 4000 employees. (M. Ignatescu)
