Radio România Internațional

Tag: prices

Energy price caps, extended

In Romania, the energy price cap will further apply after April 1.

The government in Bucharest has announced the extension of the electricity and natural gas price cap. This will apply after the end of next month, when the current price compensation mechanism was due to expire. For electricity, the cap will be extended for three months, until the end of June, and for natural gas, the extension will be for one year, until March 31, 2026. This extension will respect the scheme that is currently in force and aims to protect citizens’ incomes, said Energy Minister Sebastian Burduja. According to him, the ministry opted to extend the energy price capping period because, as calculations show, had it been liberalized now, it would have prompted increases in bills ranging from 60% to 100% for 95% of the consumption points. He specified that the one-year extension of the natural gas cap is aimed at restoring deposits for next winter, which would be done at low prices.

Burduja also explained that, in making the decision to extend the cap, it was considered the fact that, in recent months, for reasons unrelated to Romania, prices on international markets have increased significantly, after the transit of Russian gas through Ukraine was halted. The price of gas has increased by up to 65% on the European market and the price of electricity by around 25%. Sebastian Burduja also said that the compensation-cap scheme ensured, according to Eurostat data, the fifth lowest price for electricity and the fourth lowest price for gas in the entire European Union. For natural gas, the maximum price will remain the same for another year, until March 31, 2026, because, the Energy Minister specified, at the end of the current cold season, deposits will reach a very low level, and their refill will mean an increased demand for gas, which will implicitly lead to price increases and much higher bills next winter for the population.

In the meantime, the Ministry of Labor will develop a support mechanism, energy cards or vouchers that will later be granted to vulnerable people as support to cover costs. The Government’s decision to extend the electricity and natural gas price cap was taken on the same day that Hidroelectrica, a state-owned company and the main producer and supplier of electricity in Romania, announced an increase in electricity prices by approximately 60% starting April 1. Minister Burduja recommends Romanians to constantly check the website of the National Energy Regulatory Authority and opt for the best offer. (EE)

28 February 2025
February 22, 2025 UPDATE

ELECTIONS The Central Electoral Bureau of Romania announced that it decided on Saturday to admit the registration of the Protocol on the establishment of the electoral alliance “Romania Forward”, signed by the Social Democratic Party (PSD), the National Liberal Party (PNL) and the Democratic Union of Ethnic Hungarians in Romania (UDMR), in the ruling coalition, in order to support Crin Antonescu’s candidacy in the presidential elections. Antonescu is also backed by the group of ethnic minorities in the Romanian Parliament. The Central Electoral Bureau for the election of the president of Romania in May was selected on Friday. The Bureau is made up of 5 judges with the High Court of Cassation and Justice, the president and vice-presidents of the Permanent Electoral Authority and one representative of each party in Parliament. Parties, political or electoral alliances, ethnic minority organisations and independent candidates will be able to submit their candidacies by March 15, after which the Central Electoral Bureau is to rule on their validity. The election campaign begins on April 4 and ends on May 3, with the vote scheduled on May 4 and the second round on May 18. In December the Constitutional Court cancelled the presidential election over foreign interference in the electoral process. Thousands of Romanians, supporters of the independent sovereigntist candidate Călin Georgescu, who came out first in the first election round in December, took to the streets again in Bucharest on Saturday to demand that the elections be resumed with the second round.

MIDDLE EAST Romania’s interim president Ilie Bolojan said on Saturday that Romania welcomes the release of the 6 Israeli hostages held captive in Gaza, one of whom has dual, Israeli and Romanian citizenship. “We take this opportunity to reiterate our support for implementing the ceasefire agreement and releasing the hostages, as well as for the urgent provision of humanitarian aid to the population of Gaza,” president Bolojan posted on social media. He also mentioned that Romania thanks the US, Qatar, Israel and Egypt for the efforts made to free the hostages. On Saturday, Hamas handed over the last 6 hostages in a first phase of the ceasefire agreement with Israel in Gaza, which provided for the release of a total of 33 captives. Hamas, in turn, receives over 700 Palestinian prisoners from Israel.

RATING Fitch has sent a clear signal that Romania must carry on its fiscal consolidation measures and restore budgetary balance, in order to improve its fiscal credibility, the finance minister Tanczos Barna said after the international financial rating agency announced on Friday that it is keeping Romania in the investment grade category. In a statement, the agency confirmed Romania’s long-term rating at ‘BBB minus’, with a negative outlook. According to Fitch, the rating relies on the country’s EU membership and capital inflows that contribute to public revenues and macro-stability. The gross domestic product per capita and the governance and human development indicators are also higher than in countries in the same rating category, the agency explains. These strengths are overshadowed, however, by a significant deterioration of public finances and a sharp slowdown in economic growth in 2024. Adding to this is a possible adverse effect of political uncertainty. In December last year, Fitch announced that it had downgraded the outlook assigned to Romania from stable to negative. The same announcement came later from Standard & Poor’s.

ENERGY Electricity and natural gas tariffs could be offset in Romania even after April 1, when the current aid scheme is set to expire. The energy ministry has posted for public review a draft act extending the capping period, under which the scheme for electricity is extended until July 1, and for natural gas by one year, until April 1, 2026. The capping extension proposal comes as prices on European electricity and gas exchanges have increased significantly, and also as the low temperatures in Romania this winter entailed a significant increase in consumption. As a result, the line minister Sebastian Burduja announced that the government had decided to protect Romanians and support the competitiveness of Romanian companies. After the energy market was deregulated on January 1, 2021, Romania was among the European countries the most severely affected by record-high electricity and natural gas prices. Thanks to the government’s price capping decisions, households and businesses were protected from excessive prices.

GERMANY Germany holds federal elections on Sunday that are crucial to the country’s future, as the far-right is on the rise and the economy is heading for a third year of recession. The vote comes after the coalition of the Social Democrats, Liberals and Greens led by the Social Democratic Chancellor Olaf Scholz collapsed late last year. According to polls, the Conservatives are expected to win. With the far-right in second place in the polls, however, analysts say that in order to govern, the Conservatives will have to reach a compromise with the Social Democrats or the Greens, overcoming their differences.

AIRCRAFT US aircraft deployed at the Mihail Kogălniceanu base (southeastern Romania) are performing low-altitude training flights in and around Constanţa County these days, the Romanian Air Forces announced. They say that the exercises will continue until February 28 and promised that all safety measures have been taken to reduce the noise impact on civilians. Officials say that these trainings aim to increase the response capacity of aeronautical personnel.

CORRUPTION A company and 2 individuals are prosecuted in a case handled by the Romanian National Anticorruption Directorate (DNA), together with investigators from the US Department of Defence, the DNA announced today. The company owned by a Greek national has allegedly bribed a foreign official to get a EUR 9 mln contract to refuel aircraft at the NATO military base in Mihail Kogălniceanu. Two other individuals are suspected of complicity in continuing bribery in connection with an official of a foreign country.

HANDBALL CS Minaur Baia Mare qualified for the quarterfinals of the men’s handball competition EHF European Cup, although they were defeated by the Finnish team BK-46, 32-31, on Saturday, in Karis, in the second leg of the round of 16. Minaur also played the first match in Finland, on Friday, winning 33-30. Last season, Minaur Baia Mare reached the semifinals of the European Cup. (AMP)

22 February 2025
February 22, 2025

ELECTIONS The Central Electoral Bureau for the election of the president of Romania in May was selected on Friday. The Bureau is made up of 5 judges with the High Court of Cassation and Justice, the president and vice-presidents of the Permanent Electoral Authority and one representative of each party in Parliament. Parties, political or electoral alliances, ethnic minority organisations and independent candidates will be able to submit their candidacies by March 15, after which the Central Electoral Bureau is to rule on their validity. Thousands of Romanians, supporters of the independent sovereigntist Călin Georgescu, who came out first in the first election round in December, took to the streets again in Bucharest today to demand that the electoral process be resumed from where it was canceled. The billionaire Elon Musk, an advisor to the US president Donald Trump, Friday night posted a critical message on his social network X (the third this week) about the cancellation of the December elections. The US vice-president J.D. Vance had also previously questioned the cancellation of the elections. Romania’s Prime Minister Marcel Ciolacu said Bucharest would try to provide clarifications about the situation through all diplomatic channels.

RATING Fitch has sent a clear signal that Romania must carry on its fiscal consolidation measures and restore budgetary balance, in order to improve its fiscal credibility, said finance minister Tanczos Barna after the international financial rating agency announced on Friday that it is keeping Romania in the investment grade category. In a statement, the agency confirmed Romania’s long-term rating at ‘BBB minus’, with a negative outlook. According to Fitch, the rating relies on the country’s EU membership and capital inflows that contribute to public revenues and macro-stability. The gross domestic product per capita and the governance and human development indicators are also higher than in countries in the same rating category, the agency explains. These strengths are overshadowed, however, by a significant deterioration of public finances and a sharp slowdown in economic growth in 2024. Adding to this is a possible adverse effect of political uncertainty. In December last year, Fitch announced that it had downgraded the outlook assigned to Romania from stable to negative. The same announcement came later from Standard & Poor’s.

ENERGY Electricity and natural gas tariffs could be offset in Romania even after April 1, when the current aid scheme is set to expire. The energy ministry has posted for public review a draft act extending the capping period, under which the scheme for electricity is extended until July 1, and for natural gas by one year, until April 1, 2026. The capping extension proposal comes as prices on European electricity and gas exchanges have increased significantly, and also as the low temperatures in Romania this winter entailed a significant increase in consumption. As a result, the line minister Sebastian Burduja announced that the government had decided to protect Romanians and support the competitiveness of Romanian companies. After the energy market was deregulated on January 1, 2021, Romania was among the European countries the most severely affected by record-high electricity and natural gas prices. Thanks to the government’s price capping decisions, households and businesses were protected from excessive prices.

CORRUPTION A company and 2 individuals are prosecuted in a case handled by the Romanian National Anticorruption Directorate (DNA), together with investigators from the US Department of Defence, the DNA announced today. The company owned by a Greek national has allegedly bribed a foreign official to get a EUR 9 mln contract to refuel aircraft at the NATO military base in Mihail Kogălniceanu. Two other individuals are suspected of complicity in continuing bribery in connection with an official of a foreign country.

GERMANY Germany holds federal elections on Sunday that are crucial to the country’s future, as the far-right is on the rise and the economy is heading for a third year of recession. The vote comes after the coalition of the Social Democrats, Liberals and Greens led by the Social Democratic Chancellor Olaf Scholz collapsed late last year. According to polls, the Conservatives are expected to win. With the far-right in second place in the polls, however, analysts say that in order to govern, the Conservatives will have to reach a compromise with the Social Democrats or the Greens, overcoming their differences.

FOOTBALL The Romanian football champions FCSB will face the French team Olympique Lyon in the Europa League round of 16, according to Friday’s draw in Nyon, Switzerland. FCSB will play the first leg at home on March 6, with the return leg scheduled on March 13. FCSB qualified for the round of 16 of the Europa League after outplaying the Greek team PAOK Thessaloniki, coached by the Romanian Răzvan Lucescu. The aggregate score was 4-1, with the Romanians defeating the Greeks 2-1 in the first leg, and 2-0 in Bucharest on Thursday evening. (AMP)

22 February 2025
Will the cap on energy prices stay on?

After the energy market was deregulated on January 1, 2021, in the midst of the Covid-19 pandemic, Romania was among the European countries the most severely affected by record-high electricity and natural gas prices. For half a year, in the chaos that set in amid ineffective communication by the authorities at the time, both household and business consumers suffered. The situation became even more complicated after Russia’s invasion of Ukraine, when the entire European market was deeply shaken, including Romania.

Gradually, however, the situation at national level calmed down, including as a result of the government’s decisions to cap prices. By offsetting electricity and natural gas bills, individuals and industrial operators have been protected from exorbitant prices.

As of April 1 this year, however, the capping should end, at least in theory. Some household consumers have already received written notices to this effect from their energy suppliers. Against the backdrop of steep inflation that has meant a decrease in living standards for many Romanians, significantly higher electricity or gas bills–even doubled in certain cases–would be a hard blow to the family budget.

In this context, the Romanian government could take a decision this week on keeping on the current offset and capping scheme. The solution would be implemented through an emergency order.

The energy minister Sebastian Burduja spoke out however in favour of better targeting this support towards those vulnerable consumers for whom paying for energy utilities represents too great a burden:

Sebastian Burduja: “We expect to have a final decision in the Government, therefore a normative act, an emergency order that will establish exactly what the period after April 1 will look like, namely whether this basic scenario and the same capping and offsetting scheme will be kept for a period of time, let’s say until the end of the year, as the prime minister suggested, or whether there will be a formula to better target the aid for vulnerable Romanians.”

Minister Burduja’s message for dissatisfied consumers is that they can change their supplier at any time:

Sebastian Burduja: “Consumers have full power in their hands. This power means changing their supplier whenever they want. There are no contracts that hold them captive. So, when they receive an offer that they don’t like from their supplier, they go to the National Energy Regulatory Authority website and in a few minutes, online, they can change their supplier to the one that offers them the lowest price or the best conditions, in their opinion.”

And to end with a joke, one of the suppliers in Romania reminds its customers that, in fact, the cheapest energy is the one they don’t consume. (AMP)

17 February 2025
February 17, 2025

Energy – The Romanian government is to make a decision this week regarding the continuation of the current compensation-capping scheme for electricity and natural gas prices for domestic consumers. The energy minister, Sebastian Burduja, said however that he supported a better targeting of this support to those vulnerable consumers for whom the payment of utilities represents too big a burden. A government decision is to be implemented through an emergency ordinance.

Inflation – The National Bank of Romania (BNR) Governor, Mugur Isărescu, presents, today, the Quarterly Report on Inflation. According to a National Bank statement sent to AGERPRES on Friday, the annual inflation rate will record a pronounced fluctuation in the first semester of 2025, and in the second semester it will decrease on a higher trajectory than the one in the previous projection. Based on the evaluations and available data, as well as in the context of high uncertainties, the BNR Board of Directors decided to maintain the monetary policy interest rate at the level of 6.50% per year. Also, the BNR decided to maintain the current levels of the mandatory minimum reserve ratio for liabilities in lei and in foreign currency of credit institutions.

Paris – The leaders of the main European powers are having an emergency meeting, today, in Paris, to discuss European security and the war in Ukraine. Participating are the prime ministers of Germany, Great Britain, Italy, Poland, Spain, the Netherlands and Denmark, the president of the European Council, the president of the European Commission and the NATO secretary general, the French presidency announced. Today’s talks could later be expanded into other formats, with the aim of bringing together all partners interested in peace and security in Europe. The meeting in Paris takes place at a particularly delicate moment in the relationship between the European Union and the United States, after the initiatives taken in recent days by American President Donald Trump and his team to negotiate peace in Europe directly with Vladimir Putin, the European countries and Ukraine being excluded from decision-making, Radio Romania’s correspondent reports. On the other hand, the US Secretary of State, Marco Rubio, stated that Ukraine and Europe would be involved in ‘real negotiations’ for peace. According to Reuters, Rubio’s statement suggests that the meeting between the U.S. and Russian representatives, which will take place in the next few days in Saudi Arabia, is just a move for Washington to feel the pulse and see if Moscow is really willing to negotiate. The Russian-American talks will begin on Tuesday in the capital of Saudi Arabia, Riyadh, the BBC reports.

Germany – Germany is getting ready for Sunday’s parliamentary elections, in a more polarized climate than ever over immigration, further inflamed by the Trump administration’s open support for the far right, AFP reports. According to surveys, the nationalist anti-immigration movement AfD will take second place in the legislative elections, with at least 20% of the votes, behind the conservatives, who are rated at 30-32%. In a speech delivered at the Munich Security Conference, the U.S. Vice President J.D. Vance urged the traditional parties in Germany, and the classical right in particular, to give up the ‘protective wall’ or ‘sanitary cordon’ that they established after the Second World War to refuse to govern with the extreme right. I refuse such interference in the German parliamentary elections and in the formation of the government that will follow in Germany. I will not let an American vice-president tell me who I should talk to here in Germany’, said the leader of the Christian Democrats, Friedrich Merz, a favorite in the polls to become the next chancellor. In turn, the social-democratic chancellor, Olaf Scholz, described the intervention of the American vice-president as unacceptable. Instead, AfD leader Alice Weidel welcomed J.D. Vance’s statements and emphasized the similarities between her program and that of the Trump administration.

Motion – The motion of censure aimed at Romania’s coalition government led by the social democrat Marcel Ciolacu will no longer be submitted to Parliament today, the president of the opposition Alliance for the Union of Romanians (AUR), George Simion announced. In a Facebook post, he said that he expected all the opposition MPs, including those from the Save Romania Union (USR) and the Young People’s Party (POT), to join the initiative. The AUR leader added that he expected a reaction from them by Friday. The motion of censure, signed by 125 elected representatives from S.O.S. Romania and AUR, had to be submitted in Parliament today. At the moment of gathering the signatures, the USR president, Elena Lasconi, advised her colleagues not to support the initiative, on the grounds that Romania needs calm and stability. (LS)

17 February 2025
December 30, 2024 UPDATE

GOVERNMENT On Monday, during its last meeting this year, the government of Romania passed an emergency order cutting down public sector spending in 2025. The bill agreed on by the leaders of the ruling coalition (comprising the Social Democratic Party, the National Liberal Party and the Democratic Union of Ethnic Hungarians in Romania) includes measures such as suspending public sector employment or freezing pensions and salaries of public sector employees at the 2024 level. In addition, overtime will no longer be paid and no bonuses or premiums will be granted. The government claims that these measures are aimed at reducing public spending by almost EUR 4 billion, i.e. 1% of GDP. To this end, the Cabinet has set up a department made up of experts working pro bono to increase the efficiency of the government’s work. The state budget law for next year will be passed by the government in January and sent to Parliament for endorsement in a special session.

PROTESTS Penitentiary police Monday picketed the Government headquarters in Bucharest, protesting the measures to reduce public expenses. They claim they would lose up to 30% of their salaries because of the enforcement of the new provisions. Also on Monday, several trade union and employer organisations in Romania issued statements criticising the measures designed to cut expenditure in the public system. Trade unions in the education sector are against the salary freeze, while the largest trade union federation in public administration and social assistance, Columna, complains that the order had been drafted without social dialogue. The energy sector employers federation also cites the lack of consultations, criticising the introduction of a tax on special constructions. The Romalimenta Employers’ Federation warns that the food industry is receiving another blow with the cancellation of tax facilities benefitting employees in the sector. In turn, representatives of small and medium-sized enterprises say that lowering the tax threshold for SMEs and increasing the tax on dividend will have catastrophic effects for Romanian entrepreneurs. The American Chamber of Commerce in Romania also voiced concerns about the fiscal measures adopted by the Government, which, it believes, put the business environment in a difficult situation and further affect economic predictability and investor confidence.

PRICE HIKES Romanians will be paying more for petrol and diesel as of January 1, due to a 6% rise in the fuel excises, according to a document released recently by the Finance Ministry. A litre of petrol will cost 3 Eurocents more, and diesel will have almost the same price. Excises on alcohol beverages will also grow by 4.4% as of January 1. Local taxes and duties will be adjusted to the inflation rate, but the decision in this respect is going to be made by city halls. The Bucharest General Council has decided to raise these taxes by 10.4%.

UNEMPLOYMENT The unemployment rate in Romania was 3.28% at the end of November 2024, with the total number of unemployed people reaching 261,511, the National Employment Agency announced. At the end of October, the national unemployment rate was 3.20%. Unemployment in rural areas is almost 3 times higher than in cities. The 40-49 age bracket and men have the highest share among the unemployed. Middle school graduates account for 33.56% of the total registered number of unemployed people, while those with university degrees only account for 4.56%.

BORDERS The Romanian Border Police is ready to join the Schengen area with land borders as of January 1, 2025, when border controls will be eliminated at 40 road, rail and port checkpoints. According to a statement issued by the Border Police General Inspectorate, as of next year travelling to and from other Schengen member states will be similar to a trip within the country. However, people who intend to travel to the territory of another Schengen state must have a valid travel document, namely a passport or identity card, because Romanian border police will carry out random checks, the statement also reads.

DIPLOMACY Romania’s foreign ministry Sunday night said that on December 18 the Romanian ambassador to NATO conveyed Romania’s disapproval over the distribution of a geographic atlas comprising maps featuring the so-called, ‘greater Hungary’. “The atlas is of an inflammatory nature with respect to the strategic partnership between Romania and Hungary and their capacity as NATO allies. The foreign ministry in Bucharest reiterates the view it has consistently conveyed to the Hungarian authorities, that any provoking statement and gesture is not likely to help consolidate the partnership relations between Romania and Hungary. The shared history must remain a subject for historians to study,” Bucharest says. Dismantled at the end of World War I, the so-called ‘greater Hungary’ included territories occupied by Budapest, which today belong to Romania, Slovakia, Croatia and Slovenia. (AMP)

30 December 2024
Energy market in the spotlight

High energy costs affect the budgets of Romanian households, which are forced to pay the highest prices in the European Union. Whereas in Spain and Portugal, for instance, which have invested massively in green energy sources, energy prices may be as low as EUR 1 / MWh, in Romania, where traditional, more costly and polluting energy sources are still used extensively, prices reach EUR 69 / MWh. And this happens in spite of the country having the capacity and resources for a quick transition to renewable energy and for turning 100% green.

Decision-makers in Bucharest are considering all these aspects, and nuclear energy holds an important place in the energy equation. Romania is set to build two additional units at the Cernavodă nuclear power plant and is working on extending the lifespan of one of the existing units.

In fact, the country has an encouraging experience in terms of nuclear power, and the plant in Cernavodă has some of the best capacity factors in the world and a flawless track record in terms of safety. The statement was made by the head of the International Atomic Energy Agency (AIEA), Rafael Mariano Grossi, who has been in Bucharest these days and has had talks with PM Marcel Ciolacu, the foreign minister Luminița Odobescu and the energy minister Sebastian Burduja.

The talks focused on the close cooperation between Romania and the IAEA in developing a civilian nuclear programme and on the prospects for strengthening this cooperation in the energy sector.

The Agency director highlighted Romania’s international profile and its internationally acknowledged, responsible nuclear policy. He also praised Romania’s significant investments in the development of its nuclear programme, including the implementation of new nuclear technologies such as small scale modular reactors (SMRs).

For the time being, speaking about the existing situation, the energy minister Sebastian Burduja has good news for Romanians: as of next month, prices will go down, especially natural gas prices:

Sebastian Burduja: “For many Romanians, there will be cost decreases, especially in terms of natural gas, which will be evident as of next month. Electricity prices will also drop, especially for those consumers subject to a higher ceiling, the RON 1.3 / KWh, which is the current ceiling in the market.”

But, Mr. Burduja went on to explain, a supplier does not buy the entire amount of electricity it needs at market price; they have longer-term contracts, bilateral agreements and various other financial arrangements, which lead to a different average monthly price. (AMP)

9 April 2024
January 28, 2024 UPDATE

IMF An International Monetary Fund mission
headed by Jan Kees Martijn will be in Bucharest
between January 29 and February 1, to review the latest economic and financial
developments. The previous IMF visit to Romania was last autumn, when IMF
experts conducted their annual analysis of the Romanian economy. At that time, Jan
Kees Martijn said estimates were pointing to a budget deficit of 6% of GDP for
the end of 2023, and of 5% in 2024, as well as to an economic growth rate of 2.3%.
Romania has no ongoing agreements with the IMF at present, but the Fund
conducts regular visits to review financial and economic indicators. The PM Marcel Ciolacu voiced optimism with
respect to the IMF’s assessment. He explained that Romania still has problems
meeting a benchmark in the National Recovery and Resilience Programme, as the
EC believes Romania has too low SME taxation levels.

DRUGS The Romanian justice minister Alina Gorghiu requested the
emergency endorsement of the bills against drug trafficking and drug use. A
first bill concerns the set-up of the Drug Trafficking Register and of regional
rehab centres for drug addicts. A second bill eliminates suspended sentences
for drug trafficking. On Friday, after the Justice and Home Affairs Council,
the interior minister Catalin Predoiu announced that Romania set up a task
force integrating several institutions involved in the fight against drug
trafficking. He said Romania is on the front line of the crackdown on
international drug trafficking networks, and welcomed the Council’s decision to
include Romania’s and Bulgaria’s air and maritime borders in the Schengen area.
According to the Romanian official, EU member countries should focus on curbing
drug trafficking in ports, through an integrated international platform.

PRICES In Romania, the mark-up for basic foodstuff prices may be capped
for another 3 months. The announcement was made by Marcel Ciolacu recently, as
the capping scheme is due to come to an end soon. According to the PM, a
decision will be made following talks with all stakeholders. The agriculture
minister told Radio Romania that a discussion in this respect will be held on
Monday. He explained that according to data made public by the National
Statistics Institute and the Competition Council, the measure has been
effective. The agriculture minister added that the introduction of further
products in the list is being considered. The emergency order passed by the
government last summer in order to contain the effects of inflation saw the
temporary capping of mark-ups for several basic foodstuffs, including bread,
milk, yogurt, flour, eggs, chicken and pork. The measure was subsequently
extended and further products were included.

UN The UN secretary general, Antonio Guterres, Sunday called on the
countries that have suspended funding for the UN agency for Palestinian
refugees (UNRWA) to ‘at least guarantee’ the continuity of UNRWA operations,
which are vital for 2 million people, AFP reports. The UN body, which is the
main provider of humanitarian aid in Gaza, Friday announced firing a number of
employees accused of involvement in the Hamas attack in Israel on October 7,
2023. In turn, the director of the UN body, Philippe Lazzarini, warned that the
vital assistance granted by UNRWA is about to end because of funding issues. Israel
demands the resignation of Philippe Lazzarini and the termination of the
agency’s work in Gaza after the war. A number of countries, including the US, Canada,
UK, Italy and Germany, have suspended all future funding to the UNRWA.

GAC The state secretary for European affairs with the
Romanian foreign ministry, Daniela Gîtman, takes part in the General Affairs
Council (GAC) meeting in Brussels on Monday. The agenda includes a policy
debate on the legislation devoted to safeguarding European democracy, and the
presentation of the priorities of the Belgian presidency of the EU Council,
followed by an exchange of opinions between the participating ministers and
state secretaries for European affairs. The GAC meeting will also include a new
round of talks on country reports, under the annual rule of law dialogue.

UKRAINE Six months after the start of the Russian invasion, Ukrainian
defence officials and corporate executives tried to embezzle USD 40 mln
intended for arms procurement, according to SBU, Ukraine’s main security and
intelligence agency, quoted by international
news agencies. The attempted embezzlement took place in August 2022, with the
money originally earmarked for the procurement of 100,000 mortar rounds, which
were never delivered. One of the suspects was apprehended while trying to leave
the country, SBU announced. Ukraine has seen several corruption scandals since
the start of the war in February 2022. In August 2023, president Volodymyr
Zelenskyy dismissed all the regional officials in charge with army enrollments, on
grounds that they were providing recruitment exemptions for money. Curbing
corruption is one of the main conditions that Ukraine must meet in order to
join the European Union.

RUGBY The new manager of Romania’s rugby team, David Gerard
(FR), announced the 32 players selected for the national team’s debut match in
the 2024 Rugby Europe Championship. According to the website of the Romanian
Rugby Federation, only 26 of them will travel to Poland. In Rugby Europe
Championship, Romania plays in Group B, alongside Portugal, Belgium and Poland.
The first match, in Poland on February 4, will be followed by 2 home games,
against Belgium (February 10) and Portugal (February 17). (AMP)

28 January 2024
January 28, 2024

IMF An International Monetary Fund mission
headed by Jan Kees Martijn will be in Bucharest
between January 29 and February 1, to review the latest economic and financial
developments. The previous IMF visit to Romania was last autumn, when IMF
experts conducted their annual analysis of the Romanian economy. At that time, Jan
Kees Martijn said estimates were pointing to a budget deficit of 6% of GDP for
the end of 2023, and of 5% in 2024, as well as to an economic growth rate of 2.3%.
Romania has no ongoing agreements with the IMF at present, but the Fund
conducts regular visits to review financial and economic indicators. The PM Marcel Ciolacu voiced optimism with
respect to the IMF’s assessment. He explained that Romania still has problems
meeting a benchmark in the National Recovery and Resilience Programme, as the
EC believes Romania has too low SME taxation levels.

DRUGS The Romanian justice minister Alina Gorghiu requested the
emergency endorsement of the bills against drug trafficking and drug use. A
first bill concerns the set-up of the Drug Trafficking Register and of regional
rehab centres for drug addicts. A second bill eliminates suspended sentences
for drug trafficking. On Friday, after the Justice and Home Affairs Council,
the interior minister Catalin Predoiu announced that Romania set up a task
force integrating several institutions involved in the fight against drug
trafficking. He said Romania is on the front line of the crackdown on
international drug trafficking networks, and welcomed the Council’s decision to
include Romania’s and Bulgaria’s air and maritime borders in the Schengen area.
According to the Romanian official, EU member countries should focus on curbing
drug trafficking in ports, through an integrated international platform.

PRICES In Romania, the mark-up for basic foodstuff prices may be capped
for another 3 months. The announcement was made by Marcel Ciolacu recently, as
the capping scheme is due to come to an end soon. According to the PM, a
decision will be made following talks with all stakeholders. The agriculture
minister told Radio Romania that a discussion in this respect will be held on
Monday. He explained that according to data made public by the National
Statistics Institute and the Competition Council, the measure has been
effective. The agriculture minister added that the introduction of further
products in the list is being considered. The emergency order passed by the
government last summer in order to contain the effects of inflation saw the
temporary capping of mark-ups for several basic foodstuffs, including bread,
milk, yogurt, flour, eggs, chicken and pork. The measure was subsequently
extended and further products were included.

UN The UN secretary general, Antonio Guterres, Sunday called on the
countries that have suspended funding for the UN agency for Palestinian
refugees (UNRWA) to ‘ at least guarantee’ the continuity of UNRWA operations,
which are vital for 2 million people, AFP reports. The UN body, which is the
main provider of humanitarian aid in Gaza, Friday announced firing a number of
employees accused of involvement in the Hamas attack in Israel on October 7,
2023. In turn, the director of the UN body, Philippe Lazzarini, warned that the
vital assistance granted by UNRWA is about to end because of funding issues. Israel
demands the resignation of Philippe Lazzarini and the termination of the
agency’s work in Gaza after the war. A number of countries, including the US, Canada,
UK, Italy and Germany, have suspended all future funding the UNRWA. (AMP)

28 January 2024
January 17, 2024 UPDATE

PROTESTS Family
doctors in many cities in Romania Wednesday protested against the amounts
proposed by the authorities for the reimbursement of services. They say that
the cuts in the budgets of family medicine practices will have negative
effects, both for patients, and for the healthcare system as a whole. A bill
posted for public review on the website of the National Health Insurance
Agency, provides, among other things, that the funding granted to family
doctors will be over 30% smaller in 2024, and the bonuses granted to practices
in rural areas will be discarded. Meanwhile, the Sanitas trade union demands a
20% raise of all salaries in public healthcare and the scrapping of all salary inconsistencies
between various categories in the healthcare sector. On Thursday union leaders
are to present their requests to the Finance Ministry, and threaten to go on strike
unless their demands are met. The staff of some of the 9 government agencies
for small and medium-sized enterprises in the country also went on a
spontaneous 2-hour strike, demanding pay raises up to the average salary in the
Economy Ministry. The protests of farmers and transporters also continue across
the country, although employers in the field claim that they reached an
agreement with minister Sorin Grindeanu and a protocol with clear deadlines was
signed, benefiting passenger and freight carriers. The agriculture minister
Florin Barbu has also held talks with trade associations, and says that at this
moment all claims presented by farmers are solved.

PRICES On
Wednesday the Romanian agriculture minister Florin Barbu had a meeting with
retailer representatives, with the talks mainly focusing on extending the
cap on the basic food markup for another three months. Major retail chains
suggested a mechanism targeting specific products for which significant price
variations are still reported, instead of extending the overall markup cap.
Minister Florin Barbu said the topic will also be discussed with PM Marcel
Ciolacu, as retailers had requested. An emergency order introducing a temporary
measure to curb excessive price increases for some agricultural and food
products came into force on August 1st, 2023, and targeted 14 groups of food
products, including bread, cow milk, cottage cheese, eggs, sunflower oil, fresh
chicken and pork.

AUTOMOTIVE Over the past 12 years Romania has
doubled the number of cars and lorries, to become the EU member country with
the highest increase of the vehicle per capita ratio, according to a report
made public by the EU statistics office, Eurostat. Romania is still among the
countries with the smallest number of automobiles per capita in the EU. The
highest ratio is reported by Italy (684 cars per capita), followed by Luxembourg,
Finland and Cyprus, with Latvia, Romania and Hungary at the opposite pole (417 cars
per capita in Romania).

JUDICIARY People
who leave the country in order to avoid criminal prosecution, trial or
execution of punishment may have to pay the expenses incurred by the State for their
repatriation. The minister of justice, Alina Gorghiu, has announced that a
draft law in this respect has been posted on the website of the ministry for
public review. She says repatriating a fugitive criminal can cost the state up
to EUR 25,000. Last year alone, Romania spent around EUR 2 mln of taxpayer
money for the repatriation of some 600 fugitives.

SCHENGEN The Schengen
accession of Romania and Bulgaria, although partial, is a good sign, said the
Belgian PM, Alexander De Croo, whose country has taken over the rotating
presidency of the Council of the European Union. He applauded the efforts made
by both countries to address Schengen concerns and stressed that, if things
continued to go according to plan, the next steps would be taken. On March 31,
Romania and Bulgaria will lift controls at air and maritime borders with EU
member states.

CITIZENSHIP The
number of applications for Moldovan citizenship has increased significantly as
of late, which is why Chisinau is asking for the review period to be extended
to up to 6 months. According to official data, 70% of the applicants are
Russian citizens, and 20% are Ukrainian. The increase in the number of
citizenship applications made by Russians indicates attempts to avoid enlisting
in the army – says the analyst Anatol Ţaranu, a former ambassador of the
Republic of Moldova to the Russian Federation, quoted by Radio Chisinau.
According to experts, Russia could begin a full mobilisation after the
presidential elections due in March 2024. Kyiv claims that Moscow loses about
1,000 soldiers every day on the front in invaded Ukraine. (AMP)

17 January 2024
January 1, 2024

SCHENGEN The EU Council voted unanimously in favour of Romania’s and
Bulgaria’s gradual accession to the passport-free Schengen Area, after Austria, the last member country opposing
the measure, lifted its veto. As of March 2024, air and maritime border checks
with these 2 countries will be abolished, with Austria, Bulgaria and Romania committing
to also agree on a deadline for ending land border checks.The decision also comprises measures to
tighten border checks and fighting illegal migration, so that Romania and
Bulgaria will continue to receive substantial financial support and assistance
from FRONTEX. The European Council president Charles Michel, the head of the
European Commission Ursula von der Leyen, the head of the European Parliament Roberta
Metsola and the EU Commissioner for home affairs Ylva Johansson are some of the
EU leaders who have welcomed the decision.This
is an important first step, Romania’s president said in his turn, and added
that lifting land border checks as well remains a priority for Romania.

PRICES The year 2024 begins with price
rises for fuels and foodstuffs as well as for some services. For traditional,
organic foodstuffs and for food products made in mountain regions, the VAT went
up from 5% to 9%. Excises are also raised for tobacco, alcohol and soft drinks
with high sugar content. Also, certain
micro-enterprises will have to pay higher taxes on turnover, with tax increases
also in place for banks, hotels and restaurants. Housing costs will also be higher, as the VAT in
the real estate sector goes up from 5% to 9% for units worth up to EUR 120,000.
Also as of January 1, meal and holiday vouchers are to be included in the total
incomes for which health insurance contributions are paid. Analysts predict
retail price increases will be substantial,
and expect consumers to turn to cheaper products, while producers will lower the
product weight in order to observe price caps.

POLICE Close to 24,000 interior ministry staff are on duty
during the 4-day New Year’s holiday, while road traffic is monitored by 360 radar
speed guns and DUI check teams. Also, around 5,000 fire-fighters are on duty
every day around the country, to provide emergency assistance if necessary. The
border police also took steps to enhance border monitoring and to streamline
vehicle and person transit at checkpoints. Meanwhile, the authorities announced
having seized over 100 tonnes of fireworks kits and opening more than 500 criminal
investigations in this respect, and have once again called on parents not to
buy firecrackers for their children as such materials may be extremely
dangerous.

INVOICING Electronic invoicing is compulsory in Romania as of
January 1 for all B2B transactions. The system entails benefits particularly in
terms of curbing VAT frauds, the finance minister Marcel Boloş told a press
conference. He also said that those who will not use the e-Invoicing system may
receive sentences of 3 to 10 years in prison, if the new law on fighting
economic and financial crime passes the Constitutional Court review. The
authorities count on additional revenues of EUR 1 bln. Minister Boloş also said
that in December the national tax authority’s directorate for large taxpayers
secured a record-high total of EUR 3.2 bln in state budget revenues. On the
other hand, the government extended a cap on the price of compulsory motor
insurance policies, which will stay at the level in February 2023 until March
next year. The Cabinet also passed a bill making insurance compulsory for
electric bikes and scooters as well. (AMP)

1 January 2024
Inflation dropping in Romania

After
last April the annual inflation rate exceeded the 10% ceiling for the first
time in nearly 20 years, the end of last year saw this indicator rising to a
peak 16.32%. The annual inflation rate then started to drop from one month to
another, going back to under 10% this July. Now, the National Statistics
Institute announced in October it had reached 8.1%, that is, half the level
reported in December 2022.

Prices however have risen
considerably since last year, most significantly for services (over 12%), foodstuffs
(8.8%) and non-foods (less than 7%). The most substantial rise was reported for
airline fares, which are over 25% higher than in October 2022, while the prices
of healthcare services and accommodation also went up more than 16%.

For foodstuffs, the steepest
price rises were seen for beer (over 17%), and for fish and fish products
(around 16%). Pork and beef, canned meat and fruit, margarine and potatoes also
saw prices going up more than 10%.

Of the non-foods, detergent
prices went up the most substantially, by nearly 24%, followed by heating
prices (over 22%) and hygiene, cosmetics, medicines and medical products, with
rises of over 15%. On the other hand, electricity prices have dropped by 15%, while
natural gas prices remained constant.

The downward trend for
inflation will stay on in the months to come, the National Bank of Romania said
last week, but prices are expected to rise again early next year. According to
the central bank, there are significant uncertainties and risks related to
inflation, on the one hand due to the rise in taxes and charges aimed at
strengthening the state budget, and on the other hand because of the oil price
developments in the context of the conflict in the Middle East. Moreover, the
year 2024 will also be an election year, with 4 rounds of elections in Romania.

The National Bank’s inflation
forecast for this year stays at 7.5%, but the central
bank has operated an upward adjustment on its 2024 forecast, to 4.8%. According
to the new estimates, the inflation rate will get back into the range targeted
by the central bank, namely between 1.5% and 3.5%, only in the 3rd
quarter of 2025.

Romania currently has the
second-highest inflation rate in the EU, double the ones reported in Western
European countries, and analysts blame this on the very high production costs-from
electricity to natural gas to logistics and transportation, everything costs
more than in the countries in the region. And this ripples down to the prices
of food, of services, of everything that the economy uses. (AMP)

14 November 2023
October 4, 2023

COURT — Romania’s Constitutional Court postponed again, for Thursday, a decision regarding the law that allows people to cash in both a pension and a salary at the same time. This is the third postponement of the Court in connection with the notification made by the High Court of Cassation and Justice on this topic. The law refers to measures that allow people entitled to retirement to continue working. The High Court says that the document is unconstitutional in its entirety. In keeping with the law, state employees will not be allowed to cash in both a salary and a pension. People found in this situation will have 30 days to opt for one of the two rights. The law passed by Parliament on June 28 also provides for some exemptions. Thus, people elected in positions of authority or public dignity will be allowed to receive both the pension and the salary from the state. Of the nine judges of the Constitutional Court, six receive both the pension and the salary.

IMF — Romanian Prime Minister Marcel Ciolacu is holding talks today with representatives of the International Monetary Fund, who have travelled to Bucharest for the annual assessment of the Romanian economy. The IMF team met Tuesday with the MPs from the budget-finance committees and highlighted two big problems: the increase in expenses and the low rate of labor force among the population. According to the commission members, the package of fiscal measures assumed by the Government seems to have the approval of the IMF experts.

TROOPS — Romania will deploy additional troops to Kosovo, after the North Atlantic Council green lighted the presence of more forces to manage the situation in the West Balkans. Romania already has around 250 soldiers in Bosnia and Herzegovina and 80 in Kosovo. On Tuesday, on the occasion of the Security Forum in Warsaw, the Romanian Minister of Defense, Angel Tîlvăr, said his country remains firmly committed to ensuring stability and security in the region.

TALKS – Romanian President Klaus Iohannis, participated, via conference call, at the invitation of the United States President, Joe Biden, in a new round of political consultations with the allied global leaders, in the context of the recent developments in Ukraine, including of attacks on civil infrastructure near Romania. Iohannis said that Russia must stop the attacks on the Ukrainian ports on the Danube and asked for the consolidation of NATO’s deterrence and defense posture on the eastern flank and the Black Sea. Iohannis also said that, at present, increased capabilities are needed for the detection and interception of drones, as well as for a stronger air defense. In his turn, President Biden reiterated his country’s commitment to the security of Romania and the other allies on the eastern flank, including the recent deployment of additional American F-16 fighter jets in Romania.

PRICES – House prices dropped by 1.1% in the European Union in the second quarter of 2023, compared to the same period in 2022, according to data made public by Eurostat. This is the first year-on-year decrease since the first quarter of 2014. Nine EU countries recorded lower prices in the second quarter of 2023 than in the previous year, but in the other 17 member states, house prices keep going up. The sharpest decrease was recorded in Germany – almost 10% – and the most significant increase was recorded in Croatia – 13.7%. Romania reported an advance of just 0.1% in the second quarter of 2023, after a 4.6% increase in the first three months of this year. (EE)

4 October 2023
June 30, 2023

PRICES The government of Romania is discussing today an emergency
order introducing temporary measures to curb the excessive rise of foodstuff
prices. Under the new regulation, food processors may charge a maximum 20%
mark-up on production costs. The combined mark-up throughout the distribution
chain, regardless of the number of distributors, may not exceed 5%, while
retailers may charge an additional maximum 20% on purchase prices plus
overheads and direct expenses. The emergency order will be valid for 90 days
after endorsement.

EU Europe’s relations with China
are on the agenda of Friday’s talks at the European Council meeting in Brussels.
Some member states believe the West relies too much on an undemocratic country
that has close ties with Russia. The invasion of Ukraine highlighted the West’s
dependence on Russian oil and gas, and there are concerns that a similar
mistake is being made with respect to China, the source of many consumer goods,
the BBC notes. On Thursday, the first day of the Council meeting, the situation
in Ukraine and Russia was in the focus on the talks. According to Radio Romania’s correspondent, EU leaders have undertaken
to help Ukraine in the long run to defend itself against Russia’s military
aggression. The meeting was also attended by the NATO secretary general Jens
Stoltenberg, with the president of Ukraine Volodymyr
Zelenskyy joining in via video link. The
president of Romania, Klaus Iohannis, said both the EU and NATO must provide
proportional support to the R. of Moldova as well, which is waiting to take the
next step towards European integration. As regards the transit of Ukrainian
grain, which has affected Romanian farmers, the president says Romania may
provide an answer to Kyiv’s request for more intensive use of the Danube as a
transit option.

SALARIES Teaching staff in the Romanian public
undergraduate education sector will receive more benefits under the new
collective bargaining agreement signed on Thursday. The announcement was made
by the education minister, Ligia Deca. On the other hand, Sanitas trade union
announced they have secured pay raises for public healthcare staff.

PENSIONS The Constitutional Court of Romania will discuss on 26 July
a notification filed by the High Court of Cassation and Justice against the
scrapping of special pensions and the law prohibiting the payment of both
public sector salaries and pensions to the same person at the same time. Both
bills were passed on Wednesday in Parliament and are being checked for
compliance with the Constitution, before being sent for promulgation by
president Klaus Iohannis. Supreme Court judges decided to notify the
Constitutional Court with respect to the two bills, which they claim violates
several of their rights.

SUPPORT The PM of Spain Pedro Sanchez travels to Kyiv on Saturday to
reiterate the EU’s unwavering support for Ukraine, on the first day of Spain’s
rotating presidency of the EU Council, 1 July. The announcement was made by the
president of Ukraine Volodymyr Zelenskyy. Ukraine is an EU candidate country
and is hoping to open accession negotiations at the end of this year.

EUROPEAN GAMES Romania is placed 13th in the nations
ranking at the European Games in Krakow-Malopolska (Poland), 9 days into the
competition. Romanian athletes have so far won 14 medals (5 gold, 4 silver and
5 bronze). Cyclist Vlad Dascălu in the mountain bike event, athlete Claudia
Bobocea in the 1,500m race, Bernadette Szocs in the table tennis final, as well
as Kinga Barabasi and Apor Gyorgydeak in teqball are Romania’s gold medallists.
Silver medals went to athletes Bianca Ghelber in the hammer throw event and
Daniela Stanciu in the high jump, to rower Cătălin Chirilă in the 500m canoe
race and to Ilinca Pantiş in the saber event. Ştefan Comănescu in the 67 kg kumite,
Andrea Miklos in the 400 m race, Mălina Călugăreanu in the foil event, Ovidiu
Ionescu/Bernadette Szocs in the mixed doubles and Elizabeta Samara in the women’s
table tennis competitions, respectively, won bronze medals. Romania takes part
in this year’s edition of the European Games with 150 athletes in 18 sports. (AMP)

30 June 2023
Cheaper basic foodstuffs

Romania is the EU member state with the lowest food and soft drinks
prices in 2022, according to the European Statistics Office, which says such
products were nearly 30% below the EU average.

However, Romania was also at the bottom of the list in terms of
minimum wages, with EUR 515 per month, ahead of Bulgaria and Latvia alone, out
of the 21 member states that use a whole-economy minimum wage indicator. Also,
the annual inflation rate in Romania was 12.2% in March, as against the EU
average of 8.3%.

This, among other things, explains why Romania ranked 14 in the EU by
living standards measured as actual individual consumption, with figures
standing at 88% of the bloc’s average.

In this context, the government is working on legislation to cap
mark-ups so as to reduce the shelf price of basic foodstuffs. The decision was
made after the option of cutting down VAT for foodstuffs, as suggested by the
finance minister Marcel Boloş, was dismissed by PM Marcel Ciolacu. Here is his
explanation:

TRACK Past experience shows
that cutting down the VAT led to lower prices for a very limited period, to smaller
revenues to the state budget, and prices were back in two weeks’ time anyway.
So it didn’t work. What I’m talking about is not capping prices, but rather an
entire system and scheme applying on the whole supply chain, and I will present
this scheme to the Cabinet.

The measure the PM mentioned will be introduced under an emergency
order whose draft has been posted on the website of the Agriculture Ministry. The
document caps the mark-ups used by major chain stores for as many as 14 basic
foodstuffs, including bread, milk, yogurt, cornflower, sunflower oil, eggs,
meat and vegetables.

Processers will also have to draw up cost statements specifying
overheads and direct costs, and only then will they be able to add a maximum
20% mark-up. In turn, distributors will be able to add a maximum 5% margin, and
supermarkets a maximum 20%. The scheme will also apply to imported products.

The draft order will be discussed in Thursday’s government meeting
and will take effect after publication in the Official Journal. The Competition
Council and tax authorities will conduct inspections to ensure that the new
legislation is complied with. Consumers are expected to see the effects of the
measure as of 1 August. (AMP)

28 June 2023