Support for the economic sector
Following the latest government meeting, the Orban Cabinet announced new measures to support the Romanian economy
Daniela Budu, 03.04.2020, 13:55
The Orban Cabinet Thursday passed an emergency order to help the companies experiencing difficulties these days. The order introduces two aid schemes for small and medium enterprises, aimed at securing working and investment capital. The government makes over 3 billion euros available to SMEs.
A methodology has also been put together for the implementation of a previous emergency order, postponing loan repayments in the context of the economic crisis generated by the COVID-19 pandemic. The finance minister Florin Cîțu says Romania offers the best conditions of all the countries that have resorted to this measure. According to him, the impact of this decision on the Gross Domestic Product is estimated to be around 3%.
In turn, PM Ludovic Orban spoke about the impact of the coronavirus crisis on the economy, which has already reached 30%, meaning that 800,000 to 1 million people will have been idled. The PM also said he was not a supporter of austerity measures and of price caps:
Ludovic Orban: “Over 30% of the Romanian economy is affected, and the risk of decreased economic growth, lower revenues to the state budget and social security budget, including the unemployment fund, is very clear. Austerity measures have not only failed to provide a solution to the latest crisis, but on the contrary, they have probably deepened the crisis. We need to preserve peoples spending power; we need a demand that companies should work to meet.
According to the president of the Fiscal Council, Daniel Dăianu, the measures to be taken in the context of the COVID-19 pandemic should include, among other things, the postponement of non-urgent expenditure, full absorption of EU funds, and the use of long-term loans from international financial institutions, to support investments and economic operations. Daniel Dăianu explains in an op-ed that widening the budget deficit must be strictly tied to the measures to fight the COVID-19, to unemployment and to supporting certain economic operations.
He adds that the National Bank may help in smoothing domestic financial circuits and may relax monetary conditions, by means of its monetary policy interest rate and of its management of cash flows. What the central bank cannot do, however, is to inject cash into the economy. And after the pandemic is over, Dăianu explains, we must put together a strategy to strengthen the economy, to ensure reliable domestic roots in core sectors like industry and agriculture, “which together should form a robust public budget, with appropriate fiscal revenues, able to support essential public assets and allow for suitable funding for public healthcare and education.
(translated by: Ana-Maria Popescu)
