How does Romania try to ameliorate the economic crisis?
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Bucharest supports the business with state-guaranteed loans, with postponing of the payment of the utilities and with partial covering of the payment of employees with suspended contracts
Vladimir Mitev
This article was published on 21 March 2020 at the Bulgarian section of the site ”The Barricade”.
Romania has had two main news on 21 March 2020 – the current statistics on the humber of the diseased with coronavirus in the country and the entrance in force of the emergency decrees, which represent the economic and social measures of the government for support of business and employees.
Until 21 March 2020 there are 367 confirmed cases of coronavirus in Romania. 52 people are cured and externalised from hospitals. 59 new cases have appeared over the course of the last day. At the whole territory of the country there are 4 307 people, who are under quarantine in hospitals and it is being verified, whether they have got ill. 55 198 people are under isolation at their homes or are under medical supervision in the context of the pandemic There were 1501 calls on the phone number of emergency situations and 5704 on the phone number for information on the disease over the last 24 hours. So far there are 117 penal cases for disrespect of the rules for fight with the disease. 329 sanction have been imposed for disrespect of the measures for isolation and quarantine.
Some of these indicators allow for parallel with the situation in Bulgaria. Romania has close to 3 times greater population than Bulgaria and around 2 times more people who have contracted coronavirus. There are some differences with regard to the announced measures. For example, it looks like there Romania will support more courageously its small and medium enterprises. It is probably explained with the fact that the governments of the Social Democratic Power in the last years lead a conscious politics for the foundation of micro companies, which paid in function of the number of their employees a tax of 1% or 3%. That is how it got more lucrative to have a family firm and to work for yourself, than to keep the labour discipline in a corporation.
According to the measures the medium enterprises will use credits with advanteagous conditions, which will be guaranteed to the extent of 80% by the Romanian state. The maximal value of those credits, if they are used for work, will be up to 5 million lei (1,02 million euro), and if they are used for investment up to 10 million lei (2,04 million euro). The guarantees for the micro companies can amount to 90% of the level of funnding, and the credit line can amount to 500 000 lei (102 000 euro) for micro companies and 1 million lei (204 000 euro) for the small enterprises. The Ministry of Finance will subsidise at the level of 100% the interest rates upon the guaranteed credits. The interest rate payments will be subsidised from the moment of the credit’s giving until 31 March 2021. The period in which the credits will be guaranteed is 36 months with possibility for prolongation with other 36 months. The credits for investment will have a 120-month period of being guaranteed.
During the state of emergency the small and medium enterprises, which have certificate for state of emergency, emitted by the Ministry of the Economy, Energy and Enviroment, will be able to postpone the payments of the utilised utilities – electricity, natural gas, water, phone and internet services, as well as to postpone the payment of their rents for the rented real estate – both of the headquarters and of the secondary offices.
“Close to 200 000 labour contracts are suspended”, has declared the minister of labour Violeta Alexandru, after a lot of Romanian companies declared they stop their activity. The number of these contracts probably will grow and it is expected to reach 300 000 – 400 000 in the times of the one-month emergency situation.
The government’s emergency decrees also announces that if the labour contract of an employee is suspended on the initiative of the employer, because of temporary suspension of activity, at least 75% of the base salary on the individual labour contract can be paid from the budget for unemployment compensation, but no more than 75% of the medium gross salary. The employers will be able to use the support of the budget for unemployment compensation only for up to 75% of their employees, who have had active contracts in the moment, when the order for state of emergency has entered in force. The payment of those sums by the state will take place no more than 30 days after the documents are sent to the government.
The Romanian economy, just as the Bulgarian one, is very dependent on the demand in the Western Europe, which is now collapsing. Also, it relied on internal consumption, in order to have high levels of economic growth in the last years. In the conditions of contracting internal consumption, there will probably be need for other measures in support of the economy. It is not clear what will happen with the people, who work freelance and do the so-called atypical labour. It is very probable that these economic and social measures will be only the first measures among many.
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