7% - the deficit being worked with for the current year Liberalization for energy, open for restaurants, but vaccination has gotten stuck

English Section / 5 februarie 2021

January 2021 has debuted with the liberalization of the energy market for households, continuing, inter alia, with the cut of the policy rate, the decision that the interest rate cap is unconstitutional, as well as many controversies surrounding the abrogation of the law banning the sale of shares of state-owned companies on the stock exchange

The political scene has also been shaken by several events. The month began stormily, with two criminal prosecutions - for a minister and a former prime minister - and ended dramatically, with the fire in Wing 5 of the Matei Balş Hospital in the Capital, where so far, 20 people have lost their lives.

Among those events, we have recorded the victory of the former Orban government at the CCR, against the law whereby the PSD and its allies of the former Parliament were amending the Government Emergency Ordinance concerning the budget revision of August, which established that the pension point would be increased by 14% starting with September 1st, instead of the 40% stipulated by the pension law of the former Legislative.

The electricity market has been completely liberalized for households

The year began with the complete liberalization of the electricity market for household consumers. Starting with January 1, 2021, consumers who were in a regulated regime have the opportunity to change their contract / supplier, for better electricity prices. After consumers initially had until January 31 to switch to the free market to avoid staying in the regulated system and paying more by up to 26% compared to what they now pay, later, the National Energy Regulatory Authority (ANRE) extended the deadline for consumers to conclude supply contracts on the regulated market deadline until March 31, 2021.

The process of liberalization of the electricity market is a return to the situation of two years ago, when the first steps were taken in that regard, with some differences, according to Ion Lungu, president of the Association of Electricity Suppliers in Romania (AFEER). Changing the electricity supplier does not mean in any way the interruption of the power supply service, Ion Lungu assured. Among other things, the AFEER president recently mentioned that the possibility exists to change the supplier at any time: "There is no deadline, this is valid at any time, with 21 days notice, and the change of supplier must be done in 24 hours".

According to Mr. Lungu, offers are sometimes more complicated because consumers are also different, have different needs, expectations, modes of consumption and, consequently, in the market there are offers, associated services, different payment methods.

Draft Ordinance for the repeal of the Law banning the sale of state-owned shares in national companies

A topic that was widely debated and which caused controversy in the market in January was the draft Ordinance promoted by the Government seeking to repeal the Law banning the sale of state-owned shares in national companies. On January 14, Prime Minister Florin Cîţu declared: "We will repeal that law altogether. (...) This is not about selling shares, it is about attracting capital to Romania. That's what we do, we are capitalizing those companies.

The budget does not have the resources to capitalize all these companies, compared to the investments and the development that those companies need. And then, of course, that part of the shares or ownership of these companies is transferred, in exchange for that capital, to other shareholders.

It is happening all over the world, and, moreover, what we observed in Romania, but also in other countries, where we had such capital injections and they came after that with an efficient management, with corporate governance, (...) those companies have been saved, they have continued, they have hired people, they have been profitable, they have paid taxes to the budget. That is the recipe we want to follow. "

The NBR cut the policy rate to 1.25%

The Board of Directors of the National Bank of Romania decided, in mid-January, to cut the policy rate to 1.25%, from 1.50% per year. The Central Bank also decided to reduce the interest rate for the deposit facility, to 0.75%, from 1% per year, as well as to cut the Lombard rate, to 1.75% from 2% per year.

The NBR also decided to keep the current levels of minimum required reserve ratios for liabilities in lei and foreign currency for lenders.

Regarding this year's prospects, the representatives of the National Bank announced: "Uncertainties and risks to the inflation outlook arise from the future conduct of fiscal and revenue policy, at least until the approval of the public budget for 2021, which should mark the coordinates of the necessary fiscal consolidation, which will probably be initiated this year, according to measures recently announced by the Government; consolidation needs to be backed by the absorption of European funds allocated to Romania through the economic recovery package and the multi-annual budget agreed at the EU level.

Also important are the uncertainties associated with the liberalization of the electricity market for household consumers, starting with January 1, 2021, with potentially more pronounced implications on the dynamics of the CPI. Significant uncertainties and risks also arise from the external environment, in the context of the prolongation of the current pandemic wave and the associated mobility restrictions, likely to affect the recovery of European economies, probably until vaccination campaigns show their effects".

The law concerning the capping of interest rates - unconstitutional

The law on capping interest on loans was declared unconstitutional on January 28. The communique of the Constitutional Court of Romania (CCR) states: "In the meeting of January 28, 2021, the Constitutional Court, as part of the audit of the laws prior to the promulgation, unanimously voted in favor of the objection of unconstitutionality raised by 70 deputies belonging to the Parliamentary Group of the National Liberal Party. and found that the Law on Consumer Protection against Excessive Interest is unconstitutional in its entirety. The decision is final and generally binding. The arguments set out in the argumentation of the solution rendered by the Constitutional Court will be presented in the decision, which will be published in the Official Gazette of Romania, Part I ".

Lawyer Gheorghe Piperea reacted to the CCR decision, statinh that there is no longer a social safety net for those who end up in a situation of over-indebtedness due to excessive interest rates or high exchange rates. The specialist warns that hundreds of thousands of bankruptcies, foreclosures and evictions are coming: "The solution has been postponed politically, in order for the government to comfortably gain power, namely the political forces that have torpedoed all consumer protection laws, to protect banks and other corporations. The consequences are simple and harsh - consumers are deprived of any legal and judicial protection against the abuse of economic power by financial creditors. It is not a defeat of the initiators, but of the expectations of these people, now left in the blizzard. We see what protection the pro-bank "right-wing" government, will offer to its voters and other consumers ruined by the crisis and the pandemic".

The draft law that provides for the capping of interest is part of the package of four pieces of legislation aimed at protecting consumers of financial services: the Law for the protection of consumers against excessive interest; the Law for the protection of consumers against abusive and untimely foreclosures; Law for the protection of consumers against speculative assignments of claims (disputed withdrawal); Law for the protection of consumers against currency risk (conversion).

The budget will be based on a deficit of 7%

Several discussions on the current year's budget took place in January, but no draft legislation was approved until the end of the month. In the last days of January, Prime Minister Florin Cîţu announced that the drafting of the state budget for the current year was delayed because it would be accompanied by a package of legislative reforms aimed at removing certain measures that have burdened public finances. The prime minister said: "In the draft budget, we are moving towards a deficit of 7%. We hope to reach a maximum of 7.1% this year."

It seems that the drafting of the state budget takes a long time, but the goal was to go with it to on January 12.

If it isn't ready by then, it will probably take at most another week. We need to get into the parliament with the draft budget and at the same time, with the whole reform package which this budget is focused on, which will have real effects starting with 2022.

At this time, we are reversing or introducing reforms that have been delayed for 30 years. We are reversing measures that have had a devastating effect on public finances in recent years, which need to be changed to create sustainability in the future. (...) The analysis on the budget is a little different because we are starting the first part of the multi-annual budgeting, I think we will introduce it from 2023. I am also looking at the 2021-2022 budget.

Some of the reforms will have a real impact in 2022, it's a more laborious work. We are introducing for the first time the multi-annual budgeting, which I believe will be effective starting with 2024".

Regarding the increase of the value of the pension point, he said that already the pension-related budgetary expenses increased this year by almost 9 billion lei, before the drafting of the state budget. That increase is supplemented by the expenses with the payment of allowances, which increased in 2021 by 2.3 billion lei.

Upward trend in the real estate investment sector

The real estate investment market in our country recorded an increase of about 30%, last year compared to 2019, being estimated at 900 million euros last year, according to the specialists from JLL. They pointed out in January that Romania was the only country in the region that has seen an upward trend in the real estate sector. The number of transactions decreased in 2020, thus the average value of the transaction increasing by almost 57%, to 36 million euros, from 23 million euros in 2019.

Bucharest consolidated its position as the preferred destination for investments in Romania and accounted for approximately 85% of the total volume of transactions in 2020, followed by Timişoara, Cluj-Napoca and Piteşti.

The office segment posted the largest volume of investments ever recorded in Romania, with transactions totaling approximately 770 million euros.

On the industrial market, the largest transactions in 2020 were two acquisitions made by CTP - Equest Logistic Park and A1 Business Park - both located on the A1 highway, at Km. 13, the most important logistics area in Bucharest.

On the retail market, the only significant transaction concluded in 2020 was the sale of the Jupiter City shopping center, of 41,500 sq m, from Piteşti, to Supernova.

Romanian capital continues to play an important role on the Romanian investment market. Thus, Romanian buyers accounted for 28% of the volume of transactions in 2019 and over 15% in 2020, from levels close to 5% until 2017. The most active local players were Dedeman, One United, Lotus Center and Element Industrial.

Alexe and Tăriceanu - under prosecution

The National Anti-Corruption Department asked president Klaus Iohannis, on January 4, to acknowledge the beginning of the prosecution of former environment minister Costel Alexe, current president of the County Court of Iaşi, on charges of taking bribes and instigating embezzlement. The request was approved on January 5 by president Klaus Iohannis, and prosecution began on January 7.

According to DNA prosecutors, between March and April 2020, Costel Alexe, as Minister of Environment, Waters and Forests, directly demanded from the director of the Liberty Galati steel plant, several sheet metal products in connection with the performance of his job duties regarding the allocation, free of charge, to the respective factory, of greenhouse gas emission certificates and the monitoring of the measures taken by the factory for the closure of a non-compliant landfill (slag dump).

Four days later, on January 11, the DNA asked for the permission to indict Călin Popescu Tăriceanu, on charges of corruption he allegedly committed during the time when he was prime-minister of Romania. According to the prosecutors, Tăriceanu received, indirectly, in the 2007-2008 period, from the representatives of an Austrian company, material benefits worth 800,000 USD, consisting in the payment of consulting services.

In exchange, he exercised his duties so that a series of government decisions were passed in favor of the company. The request was approved by President Klaus Iohannis on January 13, and the DNA prosecuted Tariceanu on January 15, initiating the criminal action related to that case on January 25.

Extended state of alert, minimum wage at 2300 lei

The Government approved, in the meeting of January 12, the extension by 30 days of the alert state on the Romanian territory, starting with January 13, 2021.

In the next day's meeting, the Executive approved the decision setting the minimum wage for 2021 at 2300 lei. On the same day, the Constitutional Court unanimously accepted by vote the objection raised by the former Orban government regarding the law by which the former Parliament, dominated by PSD and its allies amended GEO 135/2020 on the rectification of the state budget for 2020.

According to the CCR decision, the pension point remains raised by 14% until the Parliament sets another value, and the increase of teachers' salaries will be postponed until the Parliament will refutes or confirms, in clear and unequivocal terms, the stages for the increase of their wages.

President Klaus Iohannis announced on January 14 that, starting with February 8, most schools would reopen gradually, based on scenarios.

Dragnea, prosecuted for participating in the appointment ceremony of Donald Trump

Also on January 14, the DNA communicated, following the inquiries of the mass-media, that it had decided to begin prosecution against Liviu Dragnea, former president of the Chamber of Deputies, at the time, on charges of two counts of influence peddling and offense of using the influence or authority by a person with a position of authority in a party, for the purpose of getting undue advantages for themselves or for others (art. 13 of the Law no. 78/2000).

It is about the case drawn up after Liviu Dragnea's trip, in January 2017, to the USA, to the inauguration ceremony of former American president Donald Trump. According to prosecutors, Liviu Dragnea obtained undue benefits from Gheorghe Dimitrescu, by providing access to the events of the US President's Inauguration Ceremony, from January 17 to 21, 2017, held in Washington, based on a package of benefits worth 250,000 dollars, and by providing lobbying and political consulting services worth $ 30,000 in favor of PSD. The money was allegedly paid in May 2017 by an offshore company based in the British Virgin Islands and with bank accounts in Cyprus.

The second vaccination stage, between plus and minus

January 15 marked the start of the second phase of the national vaccination campaign against Sars-Cov 2. According to official data, 6.3 million people are eligible for this stage, of which 3.8 million are people over 65, 1.2 million chronically ill people under the age of 65, and 1.3 million are employed in key areas of activity. Stage II began with the vaccination of President Klaus Iohannis, but also with a series of problems regarding the difficulty of scheduling eligible people through the online vaccination platform against Sars-Cov 2.

Due to the volume of applications that exceeded the volume of available vaccine doses, on January 21, appointments were blocked for 31 counties until February 11. That came amid the reduction, for a week, of the deliveries of vaccine doses from the American company Pfizer, despite the 36,000 doses that came from Moderna. Subsequently, at the end of January, due to the lack of the necessary vaccine doses, some of the people scheduled for the last days of the month were rescheduled for vaccination in February.

According to the official report from January 31, at 5 pm, by the end of January (starting with December 27, 2020), 585,218 people has been vaccinated, of which 479,021 people were vaccinated with the first dose, and 106,197 received the booster dose. There were 1814 common and minor reactions, of which: 456 local reactions with pain at the injection site; 1358 general reactions (fever, headache, myalgia, arthralgia, asthenia, urticaria-like allergies), and 9 side effects were under investigation.

Also on January 15, the Government approved an emergency ordinance on the remuneration of medical staff participating in the activity of vaccination centers, outside the working hours. According to the normative act, the medical staff working outside the working hours will be remunerated with 90 lei per hour - in the case of doctors, with 45 lei per hour - in the case of nurses and with 20 lei per hour - in the case of recordkeepers.

The raise of the MCV, the objective of the Cîţu government

Implementing the recommendations of the Cooperation and Verification Mechanism (CVM) is a priority for the current governing coalition. To that end, in the meeting of January 20, the Cîţu government approved a memorandum establishing a calendar for the amendments of the laws of justice and for the abolition of the Section for the Investigation of Crimes in the Judicial System.

On the same day, the Government approved the memorandum for the operationalization of the Cyber Center that will exist in Bucharest and on which European security in the digital field will depend. The Cyber Center will bring investments of 2 billion euros, European money, and the total investments will amount to 4.5 billion euros. The expenses of the building for the next 10 years will be covered by Romania, from the state budget.

During the meeting, the Executive also approved a memorandum on the schedule for the updating the National Recovery and Resilience Plan. The memorandum set out its debate and improvement in February and March, to be finalized and sent to the European Commission for approval in April.

Restaurants in Bucharest reopened indoors starting with January 25

On January 20, Ambassador Adrian Zuckermann ended his term as US representative in Romania. His term ended after just one year, as Zuckerman did not come from the diplomatic corps, but was appointed politically by former President Donald Trump. Before leaving Romania, Zuckerman was decorated by President Klaus Iohannis with the National Order "Star of Romania" with "Grand Cross" rank.

Important news for the HoReCa sector came on January 22, when the Emergency Situations Committee of Bucharest decided, following the reduction of the Sars-Cov infection rate from 2 to 3 per thousand inhabitants, to reopen indoor restaurants. According to the CSUMB decision, theaters, cinemas, restaurants, bars, cafes and gambling halls in Bucharest have been reopened, indoors, to 30% of capacity starting with January 25. The daily operating hours are between 6:00 and 23:00. Venues in the Capital reopened their doors for customers, after three months in which they were closed due to the high rate of coronavirus infection.

Prefects, the new political dignitaries

A new political scandal arose on January 27, when the Government changed through an emergency ordinance the Administrative Code and decided that prefects and subprefects would go from high-ranking public servants among dignitaries, with the pertaining wage rights. Through the same normative act, the Executive has decided the creation of 42 positions of general prefecture secretaries.

"I wouldn't say that it is a politicization of the position of prefect. It is a reorganization of that position, (...). It is an objective the coalition stands by, it is a transparent objective committed in the coalition's government's program, it is nothing that was done overnight, it is not a surprise, it is am ordinance project which was put up for public debate for a month", PM Florin Cîţu said.

"We are regulating by law what actually exists, because in fact in reality we have had for many years, regardless of the government, politicians holding positions of prefect and sub-prefects. And we are ending this hypocrisy. It is notorious that politicians, through various organized competitions, through organized procedures, reach the category of civil servants to temporarily exercise that function of prefect or subprefect. The function of prefect is that of representative of the Government, at the local level. The government is always a political government, voted by a political majority in Parliament, supported by a political majority, as a result (...) the function of prefect must be clearly a function of public dignity", said Cseke Attila, Minister of Development, Public Works and Administration.

Following the adoption of this emergency ordinance, the representatives of PSD and AUR accused the Government of politicizing the function of the prefect and declared that they would try to amend the normative act in the Parliament. If it passes Parliament in its current form, the two opposition political parties will challenge the law with the Constitutional Court. Until then, the only institution that can challenge the emergency ordinance with the RCC is the Ombudsman.

The tragedy of Matei Balş, or about a healthcare system in collapse

The end of January was dominated by the tragedy at Matei Balş, as a result of which 20 patients have lost their lives so far. On January 29, at 5 o'clock, a violent fire broke out in one of the halls located on the ground floor of Wing no. 5 from the Matei Balş Hospital in the Capital.

The first call to 112 for the fire at Matei Balş was recorded at 5:05, and the first crew arrived at the hospital at 5:14. According to ISU representatives, the fire had open flames, on the ground floor, on an area of 100-120 sqm. 4 rooms were affected, with large smoke emissions, with the possibility of expansion. Following the launch of the red code, almost 100 doctors and nurses were mobilized at the hospital. Unfortunately, the intervention was chaotic at the time of its development, as evidenced by the number of victims from day one. From the first information, it seems that the fire was caused by a short circuit at an air heater brought by one of the patients and by the large amount of oxygen in the room.

Following the event, the political opposition - PSD and AUR - demanded the resignation of the Minister of Healthcare, Vlad Voiculescu, and announced that they would introduce a simple motion against him in the first parliamentary session, after February 1st.

IGSU: "Of 1392 buildings of the public and privately owned hospitals, only 310 are certified as secure in terms of fire prevention measures"

The next day, January 30, Vlad Voiculescu, the Minister of Health, announced a set of four measures ordered immediately after the tragedy in Matei Balş, which will be detailed. The first refers to measures to increase the safety of patients in hospitals, and the second measure is the creation of a call center at the level of each medical unit, through which relatives can find out about hospitalized relatives.

"The third thing: a national fund for patient safety in hospitals. We have European money through the PNRR, we have money from the national budget. We will make sure that it is used as a priority for the infrastructure. We are talking about fire safety, earthquakes and one of the great killers: nosocomial infections. One last measure, the one related to the congestion of hospitals. We need every space available, to make sure that fewer people have to be hospitalized. 85% of deaths are among people over 65, 91% of deaths in people who already had chronic diseases.

We have proposed to the Prime Minister and we have his consent that, throughout the month of February, only the elderly, those with chronic diseases, people with disabilities, respectively those who care or live with them are eligible for all the places available on the vaccination platform", Vlad Voiculescu added.

Following the presentation of these measures by the Minister of Health, the next day, on January 31, the General Inspectorate for Emergency Situations (IGSU) published a report following the verifications carried out at the end of last year after the fire that took place in mid-November in the Covid Intensive Therapy section of the Piatra Neamţ Emergency Hospital, as a result of which 16 people lost their lives. According to the document prepared by the IGSU, 302 buildings in which medical units operate do not have a fire safety permit. Of those buildings, more than 180 do not even have a fire safety permit, which requires a plan to comply with prevention measures. The report states that, "on 16.11.2020, at national level, there were 1392 buildings of public and private sanitary units, with beds.

Out of that total, 310 hold the fire security authorization, and 52 are partially authorized".

Emilia Olescu

George Marinescu


Bitcoin reached a new all-time high of nearly 42,000 dollars

Bitcoin reached a new all-time high on January 8, of nearly 42,000 dollars, after about two months of sustained rise, as the level of interest generated by the digital currencies in general has become very high, according to an analysis by XTB România.

The growing level of uncertainty, both politically in the United States and health-related, the involvement of big, respected names in the virtual currency market or favorable opinions of relevant investors such as Stanley Druckenmiller and Paul Tudor Jones, as well as the liquidity-generating policy of the Federal Reserve, are among the elements mentioned by the brokerage house as a justification for the enthusiasm in the market.

The price of Bitcoin later began a corrective movement, in a context marked by the normalization of the political situation in the United States and the warning of the FCA (the UK financial regulator) that investors in virtual currencies run the risk of losing all their money, according to XTB.

At the end of January, the price of Bitcoin was 34,622 dollars (according to coindesk.com), the equivalent of a monthly rise of 19%.

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