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Today’s Summary
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Monday, October 12, 2020
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- First data points to 4.6% Covid-19 immunity among Romanians
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US agrees to build and partly finance two new nuclear reactors in RO worth USD 8 bln
A consortium led by US engineering firm AECom and including Canadian, French and Romanian partners, will develop the USD 8 bln nuclear plant expansion at Cernavoda, according to an Intergovernmental Agreement signed by US secretary of energy Dan Brouillette and Romania's minister of economy Virgil Popescu, on October 6, in Washington. "Once formally executed, this historic agreement will lay the foundation for Romania to utilize US expertise and technology with a multinational team building reactor Units 3 and 4 of the Cernavoda Nuclear Power Plant and refurbishing reactor Unit 1," according to a statement issued by the US Department of Energy. The two new 700 MW reactors will use the same technology, Candu 6, as the first two reactors commissioned during the 1990s. The deal would "unshackle" Romania from China's "malign influence", US Ambassador to Romania Adrian Zuckerman said, adding that "the communist party's control of every Chinese company, domestically and abroad, poses an existential danger." In June, Romania broke off its agreement with China General Nuclear Power Corporation (CGN) for building the two new reactors after the negotiations went cold. Part of the financing for the USD 8 bln expansion at Cernavoda could come from the US Export-Import Bank (EXIM). EXIM Chairman Kimberly Reed and Romania's economy minister Virgil Popescu signed a memorandum of understanding on Friday. Under the MOU, EXIM and Romania agree to explore and identify options to potentially use EXIM financing of up to USD 7 bln, particularly in the energy and infrastructure sectors. "Apart from the initialed agreement, we also managed to identify the US interest for a USD 7 billion funding component for the development of energy projects - including nuclear and liquefied natural gas and infrastructure projects - road, rail, bunkering stations, through a Memorandum of Understanding with Export-Import Bank of the United States," minister Popescu said. Among the projects to be financed, there are a railway and a motorway that would link the Black Sea port of Constanta in Romania and the Gdansk Baltic port in Poland, US Ambassador to Romania Adrian Zuckerman said.
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RO will issue more Eurobonds this year only if SURE money doesn’t come in time
Romania's Finance Ministry has planned to borrow RON 80.4 billion (EUR 16.5 bln) from the domestic market and EUR 9.3 billion from foreign markets this year, according to a presentation for foreign investors, consulted by Profit.ro. The planning suggests that Romania will issue new Eurobonds only if the money earmarked by the European Union under the SURE program aimed at supporting the labor market, doesn't come in time to finance this year's budget, the publication argues. The timing of Romania's next Eurobond issue also depends on the market conditions (hence on the economic stimulus packages in the US and EU) and the actions taken by the major rating agencies. Moody's on October 23, followed by Fitch one week after on October 30, and S&P later on December 6, are supposed to issue update reports on Romania. All of them will have to decide whether to keep the country's debt in the investment-grade category. The Government seems not to rely on more Eurobond money this year. Thus, the RON 80.4 bln plus the EUR 9.3 bln sums up to some RON 126 bln, RON 13 bln less than the total financing requirements estimated by the Government. The EUR 3 bln Eurobond issued in January, plus the EUR 3.3 bln issue in May and the USD 3.3 bln issue in July sum up to about the EUR 9.3 bln target for the whole year.
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Romania’s economic contraction in Q2, slightly softer than initially reported
Romania's GDP contracted by only 11.9% in the second quarter of the year (Q2) compared to the previous quarter (Q1), in seasonally adjusted, real terms, under the revised data published by the National Statistics Institute (INS). The INS initially reported a quarterly plunge of 12.5% in Q2. Meanwhile, the statistics institute also revised the quarterly growth in Q1 from 0.3% to 0% - meaning that Romania's economy stagnated in Q1 compared to the last quarter of 2019. In annual terms, INS revised the economic drop for Q2 from 10.5% to a softer 10.2%. Still, it also reviewed the yearly growth for Q1 from 2.7% to 2.5%. Finance minister Florin Citu hailed the Q2 GDP revised data reassuring the economy would recover under a V-shaped trajectory. According to minister Citu, "the most important good news comes from investment and net exports." "Investments had a positive contribution of 0.5pp during the crisis period (revised from 0.4pp points). It is obvious that the strategy to channel as many resources as possible to investments, RON 30 billion in nine months - the highest amount in the last ten years - worked. In terms of net exports, the negative contribution was revised to 0.4 pp, leading to a much lower negative impact on GDP. I support the baseline scenario with a V-shaped recovery of the economy in the third quarter of 2020," the finance minister also wrote in his Facebook post.
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Average net wage in RO, up 2.6% in real terms in Mar-Aug
The average net wage in Romania increased by a nominal 7.6% year-on-year to RON 3,275 (EUR 677) in August. In real terms, the average net wage rose by 4.8% year-on-year, not far from the 5.2% real increase seen in July. Since the onset of the crisis, in January-August, the average net wage increased in real terms by 2.6% compared to the same period last year. The lower earnings during the lockdown, when the net average wage dropped by a nominal 3.5% in April compared to March, was offset by the further gains in the months of recovery: June to August. Among the sectors where the wages posted double-digit nominal annual growth rates as of August, there are two budgetary sectors: healthcare (+10% year-on-year) and culture and entertainment (+12.3%). Meanwhile, two of the hardest-hit sectors recorded nominal wage decreases: 9.3% in the air transportation industry and 7.6% in hotels and restaurants. Wages in the construction materials industry rose robustly by 9.5% year-on-year - but not as fast as those in the tobacco production industry (+11.3%). Other crisis-proof sectors, at least when it comes to wages, are those of utilities (where the wages rose by 10.3% year-on-year in August), IT (+11.3% yoy), and oil services (+11.8% yoy).
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Romania takes EUR 250 mln bridge loan from EIB for Iasi regional hospital
Romania's Government approved in its meeting on Thursday, October 8, a memorandum for contracting a EUR 250 million loan from the European Investment Bank (EIB) for the Iaşi Regional Emergency Hospital, finance minister Florin Citu announced. "The total value of the investment is EUR 500 million. This loan has the role of supporting the investments until we take the money from European funds to avoid delaying the construction of this objective. The Health Ministry will ensure the implementation of the project," said Citu. The Romanian Government approved last May the technical and economic indicators for building the regional hospital in Iasi, an investment estimated at over EUR 500 million, VAT included. The future hospital will cover nearly 150,000 square meters, will have 850 beds, 19 operating rooms, and a heliport. The total project is to be ready in 84 months, while the actual construction works should be completed in 48 months. The Romanian Government's contribution to this project will be EUR 150 mln. In December 2018, former health minister Sorina Pintea said that the Romanian Government would build three regional hospitals with money from the 2021-2027 EU budget. She explained that the EU funds would thus cover 85% of the total costs, compared to 50% under the 2016-2020 EU budget.
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RO FinMin could charge 2% risk fee to guarantee rescue loan for private airline Blue Air
Under a decision subject to public debate, Romania's Finance Ministry wants to guarantee a EUR 62 million (RON 300 mln), 6-year loan to private airline Blue Air in exchange for a risk fee of 2% per year. According to Eximbank's analysis, the chances are high that the Government will end by paying the EUR 62 mln loan from the public budget. The company has a negative net worth, according to the note attached to the draft Government decision. Furthermore, the note points to the company's high operational risk, as Blue Air grounds its forecast on quick recovery resumption of international flights. The recovery plan also includes a capital injection of EUR 50 mln, out of which EUR 20 mln in 2021 and EUR 30 mln in 2022. State-controlled bank Eximbank would thus charge a risk-free interest rate of ROBOR+4pp. The creditworthiness of Blue Air, assessed by EximBank, based on the company's financial results at the end of 2019 (before the crisis), is particularly weak, underpinned by the D category, on an A-E scale. "There is significant uncertainty about the company's ability to continue operating and a high risk of not meeting its financial obligations. The company currently meets the legal requirements to be included in the category of companies in difficulty, given that more than half of the subscribed share capital has disappeared due to the accumulated losses. The company will be unable to continue operating if it doesn't benefit from financial aid," according to the evaluation drafted by EximBank and included by the Government in the note attached to the decision of guaranteeing the EUR 62 mn loan to the airline. EximBank also notes that under current circumstances, the law required Blue Air to hold a shareholder meeting and decide whether to increase the capital or liquidate the business. The Finance Ministry argues that the loan planned for Blue Air would cover the company's losses during the coronavirus crisis, and nothing more. It also mentions that the European Commission approved the state aid.
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RO Govt. resumes subsidies for technical unemployment in HoReCa
Romanian prime minister Ludovic Orban assured that the Government would continue to subsidize the technical unemployment for employees in the HoReCa sector as long as the sector's activity is suspended. Further fiscal measures will be analyzed to support entrepreneurs in the sector and reduce the impact of the health crisis. The prime minister's consultations with representatives of the HoReCa industry took place as the authorities are taking measures to combat the coronavirus spread amid rising infection rates. Indoor restaurants reopened after September 1, only to be gradually closed again in Bucharest and other counties with high infection rates. "A way to support the HoReCa sector identified by the Government is to continue paying technical unemployment for employees during the period when the activity is suspended, applying the flexible work schedule, and paying a percentage representing 41.5% of the basic salary corresponding to the job occupied for each job maintained after the activity resumes," Government representatives said in a press release. The Government will also consider fiscal measures to support entrepreneurs in the HoReCa sector, to reduce the impact of the health crisis. Consultations on the specific measures will continue in the next period.
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Dutch group NN enters home insurance segment in Romania
Dutch group NN, the leader of the life insurance market in Romania, expands its product portfolio by launching home insurance products. NN has been active in the Romanian life insurance market since 1997 and had a market share of 36.6% at the end of last year. "We enter the general insurance market in Romania, which will allow us to cover the unaddressed needs of customers. As a first step, we aim to help Romanians protect their homes with our new home insurance. In the future, we will continue to invest in diversifying our protection solutions, offered either directly or through a partner," said Fabian Rupprecht, CEO of International Insurance at NN Group. With the new optional home insurance from NN, the customers can ensure their apartment or house, including the facilities that ensure the general operation of the building, from the solar panels to water or gas supply installations. The insurance covers the risk of earthquakes, floods, landslides, fires, explosions, lightning, storms, and other whims of nature, as well as theft or vandalism.
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Romgaz will deliver gas to Bucharest’s heat supplier for another year
Romanian state-controlled natural gas company Romgaz has concluded a contract worth RON 525.9 million (EUR 107 mln) with Bucharest power producer Electrocentrale Bucuresti (Elcen), the company that also supplies the heat and hot water to Bucharest residents. The contract was signed after incumbent mayor Gabriela Firea lost the race for a new term and new mayor Nicusor Dan promised a more sustainable strategy for the municipality's heating system. Elcen, currently under insolvency, ponders the option of selling at least part of its assets to Termoenergetica, Bucharest's heat distributor. Nicusor Dan reportedly already contacted Elcen's management to explore the options. The contract signed by Romgaz and Elcen is for the delivery of natural gas between October 1, 2020, and September 30, 2021, according to a report submitted by Romgaz to the Bucharest Stock Exchange (BVB).
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German investor pours EUR 11 mln in joinery plant in RO
Quadroform, the Romanian subsidiary of German holding company Quadroform GmbH, will invest approximately EUR 11 million in a PVC and aluminum joinery factory. The group will develop the new factory on an area of 3.7 hectares in the Tetarom III industrial park in Jucu, owned by the Cluj County Council. Following the arrival of this investor, the Tetarom industrial park in Jucu reaches a 100% occupancy rate. The park's most important tenants being are German group Bosch, which has an electric car components factory, and Italian De'Longhi, which produces espresso machines, blenders, and coffee machines for Nestle. "The Tetarom industrial parks remain extremely attractive. This only makes us happy and offers us the perspective of growth and diversification of the economy of Cluj County," said Alin Tise, president of Cluj County Council, in a press release.
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Ford launches off-road version of its EcoSport SUV made in Romania
Car producer Ford Europe plans to expand the range of its EcoSport SUV produced in Craiova, Romania, with a new ‘Active’ version that relies on an off-roader image. EcoSport will thus become the first Ford SUV with an Active version. This equipment is also available on the Fiesta, Focus, and Focus Wagon models. The move comes a year after Ford also started making the Puma SUV in Craiova. In the last year, Puma has benefited from the launch of several versions, including Vignale, ST, and those with a diesel engine and automatic transmission. Currently, Puma accounts for about 80% of the 1,000 cars produced daily at the Ford plant in Craiova, and the remaining 20% are EcoSport.
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Romania, US sign 2020-2030 defense cooperation roadmap
Romania's defense minister, Nicolae Ciuca, and US secretary of defense, Mark T. Esper, signed a 'Roadmap for Defense Cooperation for 2020-2030' on Thursday, October 8, in Washington. The document outlines strategic priorities for strengthening cooperation in the Black Sea region and the continuous rotation of US forces in Romania. It also includes collaboration in cybersecurity, resilience, and US assistance to help Romania modernize its armed forces, according to the Romanian Defense Ministry. "Romania strongly supports the rotation of the US military in the Black Sea region. We understand that such a commitment involves, for us and other allies, the generation of adequate capabilities," said minister Ciuca. He emphasized that the intensification of the exercise program carried out with the US armed forces is part of the overall goal of strengthening NATO's presence and visibility on the eastern flank. "A few weeks ago, the first Patriot missiles system arrived in Romania, our country being the first state in the Eastern Flank to have in its armed forces such modern ground-to-air missile systems. Allocation of two percent of the Gross Domestic Product for defense has offered, starting with 2017, predictability in the Romanian Army's policy of endowing with modern combat equipment. It allowed us to start and support credible endowment programs," Ciuca added.
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Romania among countries recalling their ambassadors from Belarus
Romania recalled its ambassador to Belarus, Viorel Mosanu, as a sign of solidarity with Lithuania and Poland, after Minsk ordered the two countries to reduce their diplomatic staff. Romania's foreign affairs minister, Bogdan Aurescu, emphasized that the "pressure" of the regime in Belarus on some EU member states does not help dialogue. At the end of last week, Belarus recalled its ambassadors from Vilnius and Warsaw, following European sanctions against Belarusian officials accused of electoral fraud and human rights violations. In addition, Minsk has called on Lithuania and Poland to reduce the number of diplomats stationed in Belarus. Vilnius and Warsaw swiftly imposed sanctions following the alleged rigged presidential election in Belarus, alongside Latvia and Estonia. Lithuania is also sheltering the prominent Belarusian opposition figure Sviatlana Tsikhanouskaya.
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First data points to 4.6% Covid-19 immunity among Romanians
About 4.6% of Romania's population has acquired immunity by infection with the new coronavirus (COVID-19), according to the results of the latest Seroprevalence. "As many as 17,000 samples were collected. Of these, 11,000 have been processed. So far, the percentage of immunization is 4.6%," health minister Nelu Tataru said on Friday, October 9. In the first stage of the study aimed at finding what percentage of the population developed antibodies to Covid-19, samples from 4,000 people were analyzed. In the second stage of the national study, samples were collected from approximately 13,000 people. As regards the latest daily infection reported, a new record high of 3,550 was announced on October 10, while the 2,880 count on October 11 was due to a lower number of probes processed (15,709, compared to 29,284 in the day before). Bucharest and 11 of the country's 41 counties have already surpassed the threshold of 1.5 infected people per 1,000 residents over the rolling 14-day period. When this limit is reached, local authorities must enforce restrictions such as closing indoor restaurants and cinemas.
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Exchange Rates
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| 1 EUR |
RON 4.8720 |
-0.04% |
| 1 USD |
RON 4.1304 |
-0.40% |
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Main Indexes
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| BET |
8,841 |
-0.39% |
| BET-TR |
14,870 |
-0.39% |
| BET-FI |
41,262 |
-1.21% |
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