Romanian Government’s plan for economic recovery includes EUR 5 bln grants for companies

Romania’s Government is ready to spend about EUR 5 billion on direct grants to companies to restart the economy after the COVID-19 crisis, according to the National Investment and Economic Relaunch Plan to be presented on Wednesday afternoon, July 1. The document has already reached the local media.

The plan includes 17 grants and state aid schemes for all types of companies and industries, grouped into five chapters, according to a document presented by local Economica.net. Thus, the Government plans to award EUR 1 bln worth of grants to microenterprises and SMEs for restarting their activity, working capital, and investments. This includes EUR 2,000 grants for 50,000 microenterprises with no employees and three support schemes for SMEs in the sectors that were hardest-hit by the COVID-19 crisis.

Another EUR 1.25 bln will go into grants for increasing the competitiveness of local microenterprises and SMEs. The funds are mainly part of EU-funded schemes.

The Government also plans to allot EUR 624 mln for innovative entrepreneurial initiatives and digitization. This includes a new Start-Up Nation program that will focus on innovative start-ups, rebranded as Star-Tech Innovation.

Entrepreneurs in rural areas and young farmers will get some EUR 410 million through four grants schemes.

The Government also plans two new state aid schemes, one for new greenfield investments, with a budget of RON 1.5 bln (EUR 310 mln) per year (by 2023) and one for regional development, with a budget of RON 450 mln (EUR 93 mln) per year (by 2025).

However, the Government hasn’t offered any details about the timeline for implementing these schemes.

The economic relaunch plan, which is more of an electoral promise if the ruling liberal party manages to win the elections this fall, includes measures that would require a total budget of about EUR 100 billion in the next five years, Ziarul Financiar has calculated. The plan’s goal is to increase Romania’s GDP per capita (at purchasing power parity – PPP) to 87% of the EU27 average by 2025.

“Romania’s development model based only on the population’s consumption, determined by the pro-cyclical policies of previous governments, must be changed into a new economic growth model that focuses on: stimulating and developing local capital and the competitiveness of Romanian companies; investments in strategic areas of public infrastructure; digital transformation of the economy and public administration; preparing the economy for the new technological revolution; transition to a sustainable economy,” reads the introduction of the Government’s recovery plan.