Romania's finance minister praises Jan-Feb FDI, but data shows otherwise

The best proof of confidence in the Romanian economy is that, in the first two months of this year, the volume of foreign direct investments reached nearly EUR 1 bln, an increase of almost 10% compared to the same period of the previous year, minister of finance Adrian Câciu stated.

"The fact that foreign investors have decided to send more money to our country is an essential signal for the international business environment. It shows that our economy has a huge potential for development and that there is an attractive and competitive fiscal framework," Adrian Câciu wrote on Facebook.

Data from the National Bank of Romania (BNR) confirm the overall figure of EUR 927 mln in foreign direct investments in the first two months of the year, 11% up compared to the same period of 2021. However, out of this, EUR 991 mln was generated by the profits reported by the FDI companies and not (yet) repatriated.

Retained earnings of FDI companies are counted, under BOP6 methodology, as foreign direct investments.

The volume of genuine (equity) FDI, namely the money "sent by foreign investors" to their Romanian enterprises, was only EUR 191 mln in January-February 2022, 16% less compared to the same period last year.

Also under the FDI account, the local FDI companies returned parent groups EUR 255 mln.

Over the 12-month period to February, equity FDI was EUR 1.77 bln, out of the EUR 7.4 bln officially reported as FDI, while EUR 4 bln was reinvested earnings and EUR 1.6 bln was loans extended by parent groups to local subsidiaries.

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