EIB Investment Survey confirms massive economic shock of Covid-19 and effective impressive policy response;
Business investment gaps persist despite the strong – but mainly consumption driven – growth in recent years;
Investment is facing pressure looking ahead. The challenge is to adapt to the new normal, deal with pre-existing gaps and avoid new dividing lines to open up both in Romania and across the EU;
Paricipant outlined challenges and best practice to strengthen green and smart investment in Romania post Covid-19.
National Bank of Romania and European Investment Bank presented the main results of the 2020 EIB Investment Survey for Romania at the conference entitled “Towards a green and smart economy in Romania: Investment and investment finance”.
More than 120 business leaders, economists and public sector partners joined the Governor of the Romanian National Bank Mugur Isărescu, European Investment Bank Vice President, Christian Kettel Thomsen and EIB Chief Economist Debora Revoltella participated in the virtual event..
Governor of the Romanian National Bank Mugur Isărescu stated:“ At the European Union level, there is a growing consensus that the recovery from the current corona crisis needs to be sustainable. The European Green Deal and the Next Generation EU funds provide a unique opportunity for resource reallocation and transformation towards greener and more digitalized economies. We should seize this opportunity. Moving forward, central banks and supervisors in Europe and around the world are laying the groundwork to integrate climate risks into their activities, to an extent consistent with their mandates.”
“The EIB Investment Survey, conducted in Romania and across Europe, provides a powerful policy tool to better understand what investment bottlenecks need to be addressed and how the twin transition can be more inclusive, assuring that no one is left behind. The EIB is playing a crucial role and we are ready to provide more targeted financial and technical support for green and smart investment. Our track record supporting climate action, renewable energy and environmental investment in Romania and across Europe help the EIB to further strengthen supporting for Romania’s towards a green and digital economy and enhance sustainable growth.” said Christian Kettel Thomsen, European Investment Bank Vice President responsible for Romania.
Economists and business examine impact of COVID-19 and outlook of green and digital transition
Leading economic stakeholders outlined how investment needs and priorities for Romania had evolved as a result of Covid-19 and emphasises the needs to strengthen financing and best-practice advisory cooperation to accelerate transition towards a smart and green economy.
The opportunities and challenges of new financing for priority investment, in particular Next Generation EU Funds and increased support from the expanded EU budget were also highlighted.
The discussion focused also on business readiness and adaptability to the new situation by implementing key digital technologies essential to support resilience and competitiveness looking ahead.
Romania’s key regional role was also examines and steps identified to allow Romania to contribute to greening the regional economy and enabling an increased role for Romanian and international financial partners in this process.
New report shows mixed impact of COVID-19 on business investment in Romania
The EIB Investment Survey for Romania reveals that the COVID-19 pandemic is expected to add pressure on private investments. It showed that over the last financial year, more firms increased than reduced investment. However, the investment outlook is negative. Firms in Romania became, on balance, more pessimistic about the short-term outlook, very similar to EU peers. Pessimism is greatest about the economic climate. Uncertainty about the future remains the most cited long-term barrier to investment (82%), followed by the limited availability of skilled staff (72%). Firms in Romania are more likely than EU peers to cite adequate transport infrastructure as a long term barrier to investment (63% versus 40%).
“In such an environment, public investments will be crucial to boost economic recovery and guide the transformation towards more digital and greener economies. Even with limited fiscal space, reprioritising public investments against current expenditures and higher fiscal predictability would help crowding-in private investment necessary for the transition to green and smart” said Debora Revoltella, EIB Chief Economist.
COVID impact on business investment in Romania less than EU average
The new investment survey highlights how business investment is focused on replacement of existing buildings and production equipments and tilted towards tangibles.
Around a quarter (27%) of firms in Romania report abandoning or delaying investment plans as a result of COVID-19, fewer than the EU average (35%). The same proportion of firms in Romania (27%) also report continuing with investment plans albeit on a reduced scale or scope, i.e. well above the EU average (18%). In the last financial year, the main purpose of investment is to replace existing buildings, machinery, equipment and IT (43%), and the highest share of investment was in machinery and equipment (56%).
Around one in ten firms face finance constraints, and reliance on internal financing sources remains high. Access to finance is more of an issue in Romania than in other EU countries and firms lagging with investments in digitalisation and energy efficiency face greater difficulties in successfully tapping external financing.
Romanian businesses reflecting climate change challenges and opportunities
Three-quarters of firms (75%) say that climate change currently has an impact on their business, well above the EU average (58%) while, two-thirds of firms (66%) report already investing or planning to invest in climate related projects, in line with the EU average (67%). However, only 37% of firms managed to invest in measures to improve energy efficiency, well below the EU average (47%).
This country overview presents selected findings based on interviews with 480 firms in Romania in May-August 2020. The survey is part of the annual EIB Group Survey on Investment and Investment Finance (EIBIS), an EU-wide survey of 12 000 firms that gathers quantitative information on the investment activities of both SMEs and larger corporates, their financing requirements and the difficulties they face.
The European Investment Bank (EIB) and RLB NÖ-Wien will support investments in small and medium-sized renewable energy and energy efficiency projects in Austria. The EIB will make a framework loan of up to €100 million available to the Austrian regional bank, which will then create a credit portfolio of up to €200 million for financing clean energy projects.
The EIB Group, consisting of the European Investment Bank (EIB) and the European Investment Fund (EIF), has issued a guarantee to AS Citadele banka to support new lending to companies based in all three Baltic States. The Group’s first agreement with AS Citadele banka, the deal will provide capital relief for the bank and enable it to grant at least €460 million in additional loans and leases to businesses in the Baltics over the next three years. Against the uncertainty of the current economic climate and geopolitical situation, the agreement is especially welcome and affirms EIB Group’s status as a countercyclical investor.
The European Investment Bank (EIB) will lend €35 million to the Spanish multinational GAM (BME ticker: GALQ), which specialises in turnkey machinery solutions for industry, to make its rental fleet electric and develop more sustainable last-mile solutions for its subsidiary Inquieto. The loan will also be used to digitalise and develop Kirleo, the company’s vocational training school, therefore supporting digital skills development and training at the company. The EIB loan is backed by the European Fund for Strategic Investments (EFSI), the main pillar of the Investment Plan for Europe. This financing is in line with GAM’s strategic approach based on innovation and sustainability.