Liviu Voinea, Minister Delegate for Budget, encourages people and businessmen to access loans from banks for consumption and for investment, as the economic growth will be above expectations this year.
Romania will record this year economic growth far higher than what was estimated when building the budget for 2014, said, on Monday, the Minister Delegate for Budget Liviu Voinea, during a conference on the topic of the contribution small and medium enterprises (SMEs) bring to economic growth.
“In 2014, the economic growth will be high above the expectations upon which the budget was built. Precisely because the economy is improving and consolidating this improvement people should have trust and consume, companies should invest and banks issue credits.
The crisis is over, but a joint population-company-banks effort is necessary. The state will not make economic policy mistakes as those up to 2008 and brutal adjustments like in 2009 and 2010. The state is the first to trust, public investments will grow by one billion euro, given that the budget deficit will diminish. My message is: go, take loans, invest, consume, Romania has recovered “, the Minister Delegate for Budget Liviu Voinea (photo) urged the population and the businessmen.
He mentioned a few of the aid measures that the Government initiated for small and medium enterprises. ‘SMEs have two sources of financing: their own resources – and here we decided that reinvested profit be exempted from tax – and the resources they attract. The state is loaning cheaper, leaving more money on the market for companies, and interest rates are smaller,’ said Voinea.
At the end of last year, when the projected budget for this year was put together, the Government estimated economic growth of 2.2 percent for this year. “The economic growth in the first three months and the evolution of the coming months lead us to believe that we will have a higher economic growth at the end of the year, more than 3.5 percent,” said Voinea.
Not only that the prices are expected to stand still after the introduction by Romania of the single European currency euro, but the exchange rate risk will also be eliminated, Minister Delegate for Budget, Liviu Voinea told a conference on the contribution of small and medium-sized enterprises (SMEs) to the country’s economic growth.
‘We have informed the European Commission about our decision to introduce the European currency as of January 1, 2019. However, this implies several steps that need to be taken previously. For the SMEs sector the important thing is that the exchange rate risk will be eliminated and the costs of credits will gradually decrease. The prices will stay unchanged, as proven by the countries that have recently adopted the single European currency. But, of course, this doesn’t mean that we will see standardization of costs,’ Voinea said.
According to him the introduction of the European currency is a sign of stability for the Romanian economy.
‘This will be the message of stability that the business environment needs. We will continue with our policy to secure the budgetary stability. Romania will no longer be making budgetary excesses and the business environment will remain stable. This is a sign that, on the long run, deals will become possible in Romania based on the currency used by our main investment and business partners,’ the Minister Delegate for Budget also added. On May 6, the Ministry of Public Finances announced that the government established the date of January 1, 2009, as Romania’s target for joining the Eurozone.
ARB: Lower loans and interest rates for companies
Company loan interest rates will continue to drop, though not “very sharply,” and so will deposit bonuses with negative real interest rates, Radu Gratian Ghetea, President of the Romanian Banking Association (ARB), stated during the event. There already are a number of company loans with low interest rates, such as the 3.5 to 4 percent ones included in the Romanian – Swiss Fund or funding under the 50 percent guarantee government scheme for which interest rates are much lower than traditional bank loans, Ghetea explained. Given that deposit interest rates have reached a negative real and client withdrawal amounts may be smaller than deposited amounts, Ghetea admitted this constitutes a disadvantage for clients.
RON 900-1,300 subsidies for newly-set up jobs
As of July, small and medium-sized companies that manage to create jobs will be receiving youth employment subsidies for a period of 6 to 12 months, namely RON 900 for hiring high school graduates and RON 1,300 for hiring university graduates, Florin Jianu, Minister for SMEs, stated in turn. “Lack of financing and low capitalization possibilities for SMEs makes job creation difficult for small and medium-sized enterprises. For this reason, we have devised a subsidy scheme aimed towards encouraging companies to create jobs, by which we were able to attract EUR 40 million in European funds; the scheme will go in effect as of July 2014,” Jianu said.
Multiple SME financing and support programs are being carried out at the moment through the SMEs, tourism and business department, of which the de minimis aid and the youth entry-level schemes are the most successful, according to Jianu. The minister delegate also pointed out that legislative acts concerning small and medium-sized enterprises will have to pass a “SME test” before they can be adopted, pursuant to a provision under the new SME Law.