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Friday, 22 May

Prime Minister Ludovic Orban attended the meeting with the representatives of the Romanian Association of Banks

Statements by Prime Minister Ludovic Orban at a meeting with the representatives of the Romanian Association of Banks (ARB)

 

 

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Ludovic Orban: Good morning! Thank you for having honoured the invitation to carry out this dialogue between Government and bank representatives in Romania. We can say that we are after a very difficult economic period, which was generated by the COVID – 19 pandemic, but we need to seriously think of the economic relaunch plan, to attain the objective of a rapid return to normality. The Government in cooperation with the President and all institutions in the economic area, held very many consultations with employers in various sectors to establish a plan of the economic relaunch that will include a wide array of measures.

Before briefly presenting you some of the things we considered implementing, I want to tell you that the success of the economic rebuilding plan lies in the partnership with you, the financial and banking system, because it is clear that economic re-opening, the process of economic development, the stimulation of the investment process, the stimulation of Romanians' purchasing power to maintain demand to help companies increase their production, to return to a certain level of activity, depends very much on the support and collaboration between the Government, the business community, the financial and banking system and all the other organisations involved.

We are thinking, in addition to the measures we have taken, which I am sure, generated difficulties to you regarding the business plans, such as the measure to suspend the payment of loan rates...it is a measure that other states resorted to, and it was necessary as very many companies and citizens had their income diminished, and they could not pay their loan rates. By this measure, we allow companies that were affected by restrictions to be able to resume activity, and the citizens need to be able to return to work, find a job, or resume work such as the liberal professions and other professionals.

Among the topics I want to discuss is how to implement the SME Invest programme. I would also like to talk a little about mortgage loans, about the First Home programme, which has undergone certain changes. I am telling you from the outset that from my point of view, we have to strongly support the people who want to buy properties. Someone who buys a property buys furniture, buys electronic equipment, needs electrical installations, heating and cooling, etc. Any house is a very solid base for a lot of spending, which generates demand that is absolutely necessary for companies to support a high level of production. Perhaps you want to provide us with information on how the requests of companies and individuals for the suspension of the payment of loan instalments are being solved. Last but not least, after I tell you briefly what plan of measures we envisaged, we will discuss a little about this relaunch plan.

In addition to SME Invest, our intention is that in a short period of time - depending upon the European Commission's approval of state-aid schemes at the level of the European Union - to introduce more state-aid schemes; there will be a scheme close to SME Invest for large companies, guaranteeing loans for investment and working capital, with a guarantee of up to 80% and interest subsidy of up to 50%. We notified the European Commission, I have already had the first reading in Government of the memorandum whereby we want to implement this instrument.

We are also considering the guarantee and reinsurance instruments, intra-company loans, commercial loans, supplier credit, also guarantee instruments for payment instruments such as promissory notes, letters of credit for export and so on that we also think are necessary. We are trying to mobilize European resources, European funds for various programs. We already have more than two billion euros, that will be from European funds, either through over contracting mechanism or following the reallocation of funds following the increase in the funds' flexibility which was decided by the European Commission.

We will have nearly two billion euros that we will grant on various programs, especially to SMEs, for investment or restart capital especially in areas of activity hit by restrictions such as HoReCa, transport, show business, or other areas which have been affected. We are trying to establish the mechanisms of an investment fund, even yesterday, I had a video conference with the Polish Prime Minister and the President of the Polish Development Fund, as we feel the need to establish such an instrument to stimulate investments, that will be such a direct funding instrument, an instrument to finance the investment funds. Now, we establish the entire functioning scheme of the investment fund. We also have a set of other measures to stimulate employment, active measures that will be funded through SURE Programme. We changed yesterday the Ceiling Law, through the emergency ordinance. Concerning the public debt, we amended the Public debt law, in order to comply with a SURE instrument made available by the European Commission, that will finance various categories of spending of the „kurzarbeit” type, the partial work programme, the furlough is eligible, obviously, also the expenditure to ensure health protection of employees, and we are looking forward to next week’s talks regarding the „Recovery fund” which may provide us very useful financial instruments to support the relaunch programme. I will invite the Finance Minister Florin Cîțu to tell you few words, afterwards, I will invite you to dialogue, not before telling you that regarding SME Invest, my request to you is to support this program, to treat with celerity all requests, the purpose of this program, starting from the premise that because of economic crisis, very many SMEs have been in difficulty, and normally, their access to loans would have been more difficult, for this reason, I introduced this program to make more SMEs bankable. You should think that we ensure state guarantees, we subsidy the interest rate, and I think that the loans approval can be much easier, as the state is a trustworthy partner, which, in case an SME or other face difficulties, you will not encounter big issues regarding the credit agreements. It is necessary. Companies in Romania need financing. We do not have a very developed stock exchange, to allow the financing of companies, also the level of financial intermediation in Romania, of 27 percent is the smallest in the European Union and therefore, such instruments are needed to stimulate loans for companies. I do not mention that the lending conditions are not very competitive compared to other countries, as such, it is vital for us that the financial –banking system supports the economy, the investment, the companies with the working capital to allow us a very rapid recovery and a development in those fields with a development opportunity.  

 



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