Romanian Government Promises EUR 100 B for 10 Years Economic Recovery Plan

Romania is one of the last European countries to announce its economic recovery plan. This is not something strange, though, as the Romanian president stated the economy didn’t have to be restarted as it had never been stopped. It seems that Klaus Iohannis passed that temporary phase of his economic wisdom and let the specialists deal with the economy during this crisis.

Today, the Romanian PM Ludovic Orban, announces the economic recovery plan, which already can be consulted on the governmental platforms. Among the measures, the most important is the changing of the focus of the economic growth. One observation, though: the plan is stretched over the next 10 years, which means there is little help for the companies during these difficult moments.

Romanian economic recovery plan changes the model of the economic growth

Basically, the Romanian Government wants to change the model of the economic growth from one based on the internal consumption, as it is the case now, towards one focused on:

• the development of the Romanian capital and the competitivity of the Romanian companies
• investments in strategic domains of the public infrastructure
• the digital transformation of the economy and public administration

As we showed in a previous post, there is a strong component of the private consumption into the Romanian GDP. The growth of the Romanian GDP is close related to the private consumption, which counts for 63% of the GDP. As compared to other countries, such as the neighboring Hungary, where the percentage barely reaches 46%, the Romanian private consumption contribution to the GDP is huge.

This is a good thing if the Romanian Government finally decided to make this economic structural change. The private consumption, though contributing statistically to the economic growth, doesn’t contribute the same to the growth of the purchasing power of the Romanian citizens. And, to be honest, this is what people expect from the economic growth, isn’t it.

The most important grants for companies as mentioned in the economy recovery plan

First of all, there is a catch with the economy recovery plan announced by the PM Ludovic Orban. The economic recovery plan, though looking very promising, stretches over the next 10 years. This means that the Romanian economy and the Romanian companies won’t immediately benefit from the whole budget mentioned. Also, it is not clear how the Romanian companies and the hundreds of thousands of unemployed would take immediate advantage of some of the sums allotted to protect the Romanian capital.

The recovery plan has the following main grants for the Romanian companies:

• Grants for restarting the Romanian enterprises, for working capital and for investments: EUR 1 B
• Grants for increasing the competitivity of the Romanian SMEs: EUR 1 B
• Grants for digital innovation and the integration of digital technologies: EUR 330 M

Also, the economic recovery plan mentions separate budgets for the most affected industry in Romania, the hospitality industry. Here, the Romanian Government wants to offer grants for the costs with the rent, the costs with technical unemployment, but also grants for hotels and restaurants according to the annual turnover.

More details are expected Wednesday, July 1, at 6 PM local time, when Ludovic Orban presents the recovery plan, but, again: if the plan is to be stretched over 10 years, than we don’t talk about an immediate recovery and about an immediate help for the Romanian companies.