Event News.ro – ROINVEST

• News.ro’s traditional premium event, the fourth edition being organized in the context of the economic slowdown and the war in Ukraine, which aims to support investments as a solution to eliminate the effects of the crisis and for the development of the country.
• During difficult economic times, large investments are necessary in the economy in order not to enter a crisis, and the state gives the signal. The government must propose and implement investments that open up business opportunities.
• Similarly, private companies should invest in development, but also in production to sell, come up with new business ideas and honor all their orders and debts.
• The economy must move forward, the main objectives being to encourage production and consumption.
  At the event, we aim to discuss the state’s investment plans with its own funds and European funds, as well as those of private companies to support business development and the economy in general.

MACROECONOMIC CONTEXT

• Romania’s Gross Domestic Product recorded an increase of 2.1% in 2023 compared to 2022, after increasing by 4.7% in 2022 compared to 2021, which represents a slowdown in economic growth from year to year.
• Investments contributed 3.6% to the 2.1% increase in GDP in 2023, and final consumption by 2.8%.
• The Ciolacu government has proposed a GDP of 360 billion euros by the end of 2024 through its government program, with 120 billion euros (50% more) more than in 2021.
• The Gross Domestic Product per capita expressed in standard purchasing power parity (PPP) was in Romania in 2023 at 80% of the EU average, i.e. at the same level as Poland and above Hungary, which is on par with Croatia (76%). This percentage also places our country close to Estonia (81). On the other hand, Eurostat data shows that the government deficit increased from 88.628 billion lei in 2022 (6.3% of GDP) to 106.568 billion lei (6.6% of GDP) in 2023.
• In the state budget for 2024, the Government estimated economic growth of 3.4%, a deficit of 5% of GDP and an average annual inflation of 6%.
• The European Commission estimates economic growth of 3.3% for Romania in 2024, as does the World Bank, and the IMF 2.8%. However, the deficit estimates are worrying, at around 7%, against the backdrop of the election year. Already in the first five months, the deficit was 3.4% of GDP, which could lead to a reduction in budget spending and tax increases next year, if the situation does not improve. Accelerating investments can contribute to improving estimates and better final results for the Romanian economy, with positive effects on society.

INVESTMENT CONTEXT

• The government has proposed to intensify public investments, which are estimated to reach 110 billion lei in 2024, i.e. 7.2% of GDP (investments financed from national and European funds and PNRR). The executive led by Marcel Ciolacu claims that budgetary programming will in the future be mainly oriented towards investments, the ambitious objective being for public investments to reach 10% of GDP.
• The word “investments” appears 206 times in the government program and there is also an emphasis on increasing productivity. This will be achieved by stimulating domestic production of the “Made in Romania” type and through a massive investment program at local, regional and central levels. An important objective is the reindustrialization of Romania through state aid schemes and facilities for domestic production.
• The government program also mentions the transition to an innovation economy, through government programs such as Business Accelerator, based on grants, for competitive/high-tech industries. It also proposes the creation of the Romanian Innovation Fund, a venture capital fund in the form of a partnership in which private partners capable of assuming the risk of co-financing and the quality of evaluator are attracted alongside the Romanian state.
• The government wants public-private partnerships for at least 5 major investment objectives and claims that 15 billion lei can be accessed only from private pension funds in Romania, on feasible PPP projects.
• The executive has forecasted in the government program FDI inflows of 24 billion euros (120 billion lei) by the end of 2024.

EUROPEAN INVESTMENT CONTEXT

• Within the 2021-2027 Cohesion Policy, Romania has been allocated European funds of 31.35 billion euros, and through the Recovery and Resilience Mechanism it had an initial allocated budget of 29.2 billion euros for the implementation of the National Recovery and Resilience Plan. The money allocated through the PNRR was reduced by 2.1 billion euros as a result of economic growth.
• The implementation of the PNRR involves the implementation of reforms and investments in key areas of the economy (infrastructure, education, health, agriculture, environment and energy), which will considerably increase the potential for sustainable growth, supporting the digitalization of the economy and the green transition, but there are still major problems with absorption capacity, delayed reforms and deadlines for signing some contracts.
• 20% of the funds allocated to investments in transport, the business environment and mobility, urban regeneration and the valorization of cultural heritage from the PNRR must be spent on including the digital component in the respective projects.
• The projects will run until 2026, and the European Commission and the EU Council will approve twice a year, for each state, the settlement of the amounts spent. The last payment request will be sent in August 2026.
• In addition, with the advent of EU Regulation 2088/2019, ESG investments (sustainable investments) are growing exponentially, as more and more investors and issuers use ESG tools and climate data to inform their investment decisions.

DISCUSSION TOPICS:

• Government investment program.
• National Recovery and Resilience Plan – objectives for 2024-2025 and main projects until 2026. Involvement of the private sector in projects in the PNRR.
• European funds in the multiannual framework for Romania – How do we attract this money? What projects do we propose?
• In what areas do we invest – the state and private companies.
• ESG investments – the new European trend and what such investments and financing are made in Romania.
• Investments in transport infrastructure, the basis of the country’s development.
• Investments in communications infrastructure – the digitalization of Romanian public services. Private investments in digitalization projects.
• Investment strategies of companies – what development investments are being made and what proposals do companies have for the authorities.
• Investment funds – a solution for companies and supporting the economy.
• The involvement of investment divisions of banks in supporting companies and public and private projects.
• Foreign investments. What should be done to attract new foreign investments and develop existing ones in the current geopolitical context?
• Economic and fiscal facilities for investments.
• Is a long-term government investment strategy needed?