Four impact scenarios of OUG 114, as they were presented by Florin Georgescu to Liviu Dragnea and C.P. Tariceanu
The tax on bank assets, called the “tax on greed” by OUG 114 authors who imposed it, may reduce the economic growth by 0.6-1.1 percentage… Mai mult›
Hourly labour costs grew by 13.09% in the fourth quarter of 2018 compared to the same period in 2017, according to data announced by INS.… Mai mult›
Bulgaria vs. Romania: Reform and results of tax authority in Sofia and counter-reform and its consequences in Bucharest
Bulgarian tax authorities, which have successfully implemented a modernization program with World Bank’s support, a program that Romania abandoned after six years of delays and… Mai mult›
The general consolidated budget ended the first month of 2019 with a surplus of RON 717 million or 0.07% of the estimated GDP for the… Mai mult›
Finance throws away for good contract for ANAF modernization with World Bank: 6 years and EUR 18 million down the drain
Sources close to talks with the World Bank have stated for cursdeguvernare.ro that the Finance Ministry notified the financial institution in November 2018 that it… Mai mult›
Study: Investment of Romanian companies are risky and with a low multiplier effect across economy. Chance is with medium-sized companies
de Adrian N Ionescu , 26.3.2018
Most of the Romanian companies’ investments are risky – because they use resources in the short term, they are oriented towards “what everyone does”, therefore they are out of phase in terms of profitability. Besides, Romanian companies’ investments have a reduced multiplier effect across the economy, according to a study released on Monday by economic analyst Iancu Guda.
The lack of financing sources adds to the picture: the delay in paying suppliers generated almost 39% of the amount of RON 77 billion invested in 2016 – according to the latest official data.
Otherwise, the loan financing from banks generated RON 37 billion (“this is the total level of new loans granted by the banking sector to all private companies in 2016) and own resources only RON 10 billion, of which 7 billion – reinvested profit and 3 billion by supplementing the share capital.
Study findings are:
- “Financing long-term investment is not sustainable, with almost 40% being covered by short-term resources;
- Investments have a strong focus on residential construction and real estate transactions, which:
- are out of phase (not made at the right time),
- suffer from the herd instinct (we invest in real estate because most of the others do the same and “we are not good at something else”) and myopia (in the sense that they focus only on the present and do not consider the medium-term evolution of demand and financing costs);
- Except for software development activities, the sectors with the highest investment rate (consumption, tourism, social welfare services) do not have a multiplier effect on the economy;
- Increased wage spending, unfair competition (by tax evasion and underground economy) and strong competition from imported products have reduced the level of investment made by the companies that are most affected by these phenomena;
Small businesses (with revenues below one million euros) and large companies (with revenues over EUR 50 million) have a common attribute (though for different reasons):
“have a rate of investment in tangible assets almost equal to their ageing (the ratio between CapEx and depreciation is close to 1),” according to the study mentioned.
- Investment by companies’ size
- Turnover CapEx : depreciation Number Debts : assets profit : revenues
The difference is that while small companies are constrained by limited access to financing, large ones will have entered a period of assimilation and making the most of older investments, according to the article “Five issues of Romanian companies’ investments“.
- “Small firms cannot make significant investments because of the difficult access to financing and the polarization effect (excessive concentration of revenues to large firms);
- The moderation of investments on the side of very large firms can be explained by economies of scale (recovery of past investments) and sometimes some self-sufficiency, management convenience and resistance to changing the business model,” according to the source mentioned.
Instead, “the medium business segment, with revenues between EUR 1 and 50 million, is very interesting because they have a rate of investment in tangible assets almost twice as high as their depreciation, while the indebtedness is close to the optimum level (60% – 65%) and the level of profit obtained is the highest”.
At the same time, companies established before 2000 register the highest level of investments, namely RON 32.7 billion.“Despite that, their investments cover only the level of depreciation, so the value of the tangible assets is relatively stable”.
The companies established in the last five years have the highest level of investments compared to the depreciation, with the ratio of 2.79, according to the economist Iancu Guda, who is also the President of the Romanian Association of Financial Banking Analysts (AAFBR).
Lăsați un comentariu
ECOFIN / Tax havens list has been updated. Politico: Eugen Teodorovici took EU Finance Ministers by surprise
Finance Ministers of the EU voted on Tuesday at the third meeting of the Council for Economic and Financial Affairs (ECOFIN) chaired by Romania, the… Mai mult›
The Justice Ministry has prepared the two OUG drafts for which the coalition has put much pressure on the Justice Minister Tudorel Toader before granting… Mai mult›
Dozens of companies, mayoralties, sports teams, public figures, organizations and many ordinary people joined the protest "Romania wants motorways". Of course, the country did not… Mai mult›
Facebook announced Thursday that it has closed hundreds of false accounts promoting false content in the UK and in Romania and this is the first… Mai mult›
Laura Codruta Kovesi was indicted on Thursday in a second case. The section for investigating the crimes committed by magistrates accused her of having led… Mai mult›
The draft law on the so-called repatriation of Romania's gold reserve is either a populist diversion or another attempt to remove gold from the administration… Mai mult›
The protest of magistrates from Cluj Napoca. More than 200 prosecutors and judges, with white bands on their arm, came in front of the local… Mai mult›
Laws on judiciary, amended again by OUG: judges who were once prosecutors may be appointed as prosecutors
The Government approved on Tuesday an OUG that was not publicly debated, which amends several provisions from laws on the judiciary that refer to prosecutors… Mai mult›
"Iceberg" operation: ANAF announces that it selected 487 companies which are to be audited based on risk analysis
Virgil Pirvulescu, Vice President of ANAF at PwC Annual Tax Conference The National Agency for Tax Administration (ANAF) has identified 487 large and medium-sized companies… Mai mult›
Commissioner Corina Cretu: There is a risk that Magurele Laser will not be completed during this budget implementation
In the absence of a rapid response from the Romanian Government to the European Commission, there is a risk that Magurele Laser can no longer… Mai mult›
The Presidential Administration announced on Friday that President Klaus Iohannis, "as the head of Romania’s foreign policy decisions and Romania's representative at the external level,… Mai mult›
Further to the message on the impact of OUG 114/2018 transmitted on Thursday to the organizations in the Coalition for Development of Romania (CDR), AmCham… Mai mult›
Finance minister stopped borrowing money from the market. Teodorovici: We have funding resources for minimum six months
Minister of Public Finance (MFP), Eugen Orlando Teodorovici, has ordered to stop borrowing operations on the market because MFF would have all the money needed… Mai mult›
BNR: If we sold foreign currency to defend Romanian leu, as PSD wants, interest rates would explode and ROBOR would go over 5-7 percentage points
The National Bank of Romania wants a "loyal cooperation" with the Ministry of Public Finance, and that involves a prior consultation with the central bank… Mai mult›