Romania – real convergence on the way to euro adoption

Romania – real convergence on the way to euro adoption

Romania – real convergence
on the way to euro adoption
Ionut Dumitru
President of the Fiscal Council and
Chief-economist, Raiffeisen Bank Romania
June 2014
Eurozone enlargement – current status
Bulgaria
Croatia
Czech Republic
Hungary
Lithuania
Poland
Romania
Denmark
Sweden
United Kingdom
Initial target
2010
2019
2009/2010
2008
2007
2008/2009
2014
no target
no target
no target
Date of setting the target
2004
2003
2003
2004
2003
2007
Current target
no target date
no target date
no target date
no target date
2015
no target date
2019
not obliged to join
de facto opt-out
not obliged to join
Source: European Commission
Public policies make a difference
GDP per capita in PPS
(% of average for Germany and France)
60
58.3
57.8
55
50
46.5
45
42.1
47.1
41.4
40
41.2
35
30.8
30
27.0
24.4
Poland
Hungary
Romania
Source: European Commission
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2000
1999
1998
1997
1996
1994
1993
1992
1991
1990
1995
Bulgaria
2002
22.3
20
2001
25
28.3
Real convergence: not a one way street
GDP per capita in PPS
(% of average for Germany and France)
140
130
120
110
100
90
80
70
60
Italy
Ireland
Portugal
Spain
Greece
Source: European Commission
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
50
Euro area enlargement: euro adopted
recently only by small countries
14
12
10
8
6
Spain
Greece
Portugal
Poland
Czech Republic
Hungary
Bulgaria
Lithuania
Romania
Slovakia
2008: Malta, Cyprus
Slovenia
0
Latvia
2007: Slovenia
Estonia
2
Cyprus
Euro adoption years:
Malta
4
Stable population in 2013 (% of Euro area)
Gross domestic Product in 2013 (% of Euro area)
Source: European Commission, Eurostat
2009: Slovakia
2011: Estonia
2014: Latvia
Euro area enlargement: deep foreign trade
integration for Euro area late comers
Exports of goods and services (% of GDP)
120
100
80
60
40
20
1999
2001
2007 2008 2008 2009 2011
Exports towards EU member countries (% of GDP)*
2013
2013
Poland
Czech Republic
Hungary
Bulgaria
Lithuania
Romania
Latvia
Estonia
Slovakia
Malta
Cyprus
Slovenia
Greece
Portugal
Spain
0
2013
Exports towards non EU member countries (% of GDP)*
Total exports of goods and services in 2013 (% of GDP)
* computed in the year of Euro adoption for new Euro area member countries and in 2013 for non Euro area member countries
Source: European Commission, Eurostat, Raiffeisen RESEARCH
Euro area enlargement: high GDP per capita
at the moment of euro adoption
GDP per capita in PPS as % of Germany+France in
the year of accession in Euro area
84
81
79
74
73
69
65
Slovenia
Cyprus
Malta
Slovakia
Estonia
Latvia
1999
60
Greece
Spain
Portugal
59
2001
2007
2008
2008
2009
2011
2014
Source: Eurostat, Raiffeisen RESEARCH
Real convergence in Romania by 2019:
some scenarios
GDP per capita at PPS in Romania
(% of Germany+France)
GDP per capita at PPS (%
yoy, average for period)
70
Reference period Romania Germany+France
2001-2008
12.0
2.9
2001-2013
8.4
2.4
2006-2013
7.5
2.1
2009-2013
2.9
1.4
2011-2013
4.5
2.3
63
59
60
54
50
GDP per capita in
Romania in 2019 (% of
Germany and France)
Scenarios for period 2014-2019
Scenario 1
4.5
2.0
54
Scenario 2
6.0
2.0
59
Scenario 3
7.0
2.0
63
47
40
30
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
Real GDP should grow by at least 4% on
average per year to be in Scenario 2.
2000
20
Scenario 1: +3.0% per year growth in GDP per capita at PPS
Scenario 2: +4.5% per year growth in GDP per capita at PPS
Scenario 3: +6.0% per year growth in GDP per capita at PPS
Source: European Commission, Eurostat, own computation
Scarce net inflows of foreign capital to
private sector, slow recovery pace
20
12
15
9
10
6
5
3
0
0
-5
-3
7.3% per year
2.1% per year
-6
Total inflows of foreign capital in private sector (% of GDP)
Note: net inflows of foreign capital in the private sector; portfolio
inflows excluded
Source: National Bank of Romania, National Institute of Statistics
Real GDP excluding agriculture (% yoy)
14Q1
13Q1
12Q1
11Q1
10Q1
09Q1
08Q1
07Q1
06Q1
05Q1
04Q1
Net loans, deposits (% of GDP)
03Q1
Net FDIs (% of GDP)
-9
02Q1
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
-10
Much stronger progress in absorption
of EU funds is needed
85
Romania: progress with absorbption of
EU Structural Funds
79
71
69
40.2
64
62
57
53
52
Bulgaria
Utilizarea Fondurilor Structurale permite (1) cresterea potentialului de crestere economica si (2)
acoperirea necesarului de finantare externa al tarii
Slovakia

45
Payments to final beneficiaries, including advances (% of
total allocations for 2007-2013)
Interim (recognized) payments from the EU (% of total
allocations for 2007-2013)
Source: European Commission
Romania
Czech Republic
Hungary
Slovenia
Latvia
Poland
Lithuania
Apr-14
Mar-14
Dec-13
Sep-13
Jun-13
Mar-13
Dec-12
Sep-12
Jun-12
Mar-12
Dec-11
Sep-11
Jun-11
Mar-11
Estonia
33.9
Money paid by European Commission (% of total
allocations 2007-2013)
Note: Transfers refer both to interim (recognized)
payments and advances; most recent data made
public by the European Commission; Data refer to
15 April 2014
Potential agricol ridicat...
Suprafata arabila in 2010 (milioane hectare)
Suprafata cultivata cu cereale in 2010
(milioane hectare)
20
18
10
16
9
8
14
7
12
6
10
5
8
4
6
Populatia ocupata in agricultura in 2012
35
30
7
25
6
20
5
15
Lituania
Cehia
Danemarca
Bulgaria
Ungaria
Marea Britanie
Italia
Romania
Spania
Germania
Franta
Danemarca
Cehia
Suedia
Bulgaria
Ungaria
Marea Britanie
Italia
Romania
Polonia
Spania
0
Germania
1
0
Franta
2
2
Polonia
3
4

Romania ocupa un loc
important in Uniunea
Europeana din punct de
vedere al suprafetelor
VAB in agricultura in 2013 (% din total
VAB in economie )
agricole si al ocuparii in
agricultura
4
10
Uniunea Europeana =5.2%
5
3
Medie UE =1.7
2
0
RO BG
PL GR PT
LT
SL
LV HU
IE
EE
FI
AT
ES
Salariati (% din total persoane ocupate in economie)
Auto-ocupare (% din total persoane ocupate in economie)
CY
1
0
RO BG
LV
HU HR
EE
LT
PL
GR SK
SL
FI
CY
ES
Sursa: Eurostat, Institutul National de Statsitica , Raiffeisen RESEARCH
... dar insuficient valorificat - probleme
structurale in agricultura

Impact puternic al conditiilor climaterice asupra productiei agricole

Segmentare importanta a exploatatiilor agricole (lipsa cadastrului)

Agricultura de subzistenta detine o pondere importanta

Romania este importator net de produse agroalimentare (exclusiv cereale)
120
Structura suprafetei agricole utilizata dupa
marimea exploatatiei in 2010 (% din total)
115
100
110
90
105
80
100
70
Peste 50 ha
60
95
20-50 ha
50
90
10-20 ha
40
85
5-10 ha
30
Medie 1995-2013
0-5 ha
20
10
0
RO
GR
SL
HR
IT
PL
LT
PT
HU
BG
ES
AT
LV
NL
CH
EE
SK
NO
SE
FR
FI
IE
DE
UK
CZ
DK
Valoarea adaugata bruta in agricultura (termeni reali,
2003=100)
2013
2012
2011
2010
2009
2008
2007
2006
2004
2005
2003
2002
2001
2000
1999
1998
1997
1996
1995
80
Sursa: Eurostat, Institutul National de Statsitica , Raiffeisen RESEARCH
Cresterea eficientei cheltuielilor de investitii
publice este absolut necesara
Cheltuieli publice de investitii (% din PIB, medie anuala, 2000-2013)
5
4.5
Cheltuieli publice de investitii (% din veniturile bugetare, medie anuala,
2000-2013)
16
14
4
12
3.5
3
10
2.5
8
2
6
1.5
Scor privind calitatea infrastructurii de transport
(WEF, 2012-2013)

7
6
5
2

1

exista un sentiment puternic ca progresele facute in
domeniul infrastructurii au fost foarte mici

infrastructura slaba ramane o problema esentiala pentru
Romania
Necesitatea prioritizarii investitiilor si atragerii sectorului privat
(parteneriate publice-private)
DE
FR
UK
NL
ES
LU
AT
DK
SE
BE
FI
PT
IE
NO
IT
MT
SL
CZ
VY
LT
EE
GR
HU
SK
LV
PL
BG
RO
0
Sursa: Eurostat, World Economic Forum, The Global Competitiveness Report 2012-2013
Austria
Belgium
Denmark
Germany
United Kingdom
Italy
Finland
EU 18
Norway
EU 28
France
Sweden
Greece
Slovakia
Iceland
Netherlands
Cyprus
Portugal
Slovenia
Hungary
Spain
Malta
Latvia
Luxembourg
Ireland
Czech Republic
Poland
Bulgaria
Resurse financiare mari alocate pentru cheltuielile publice de
investitii, dar:
4
3
Estonia
Romania
Austria
Belgium
Germany
United Kingdom
Italy
Denmark
Switzerland
EU18
Slovakia
EU28
Finland
Greece
France
Norway
Sweden
Cyprus
Portugal
Croatia
Spain
Malta
Latvia
Netherlands
Ireland
Iceland
Slovenia
Hungary
Bulgaria
Lithuania
Poland
Luxembourg
0
Estonia
0
Czech Republic
2
Romania
0.5
Lithuania
4
1
Resurse reduse alocate sanatatii si educatiei
% din PIB, medie 2000-2012 Sanatate Educatie
EU 27
6.94
5.27
EU 18
6.92
4.94
Bulgaria
4.38
3.94
Czech Republic
7.23
4.68
Hungary
5.26
5.50
Poland
4.62
5.78
Romania
3.38
3.75
Slovakia
5.90
3.88
Romania
Bulgaria
Cehia
Ungaria
Locuinte si amenajari
comunitare
UE-27
35%
Protectia mediului
40%
Actiuni economice
Structura cheltuielilor bugetare dupa clasificatia functionala, 2012
Polonia
Slovacia
30%
25%
20%
15%
10%
5%
Protectie sociala
Educatie
Recreere, cultura si
religie
Sanatate
Ordine si siguranta
publica
Aparare
Servicii publice generale
0%
Sursa: EUROSTAT
Eficienta energetica scazuta a economiei

Eficienta energetica a economiei s-a imbunatatit, dar ramane redusa comparativ cu celelalte
economii din Uniunea Europeana
Cresterea eficientei energetice a economiei permite cresterea competitivitatii acesteia, inclusiv
reducerea importurilor de produse energetice
Gross inland consumption of energy divided by GDP (kg
of oil equivalent per 1 000 EUR) in 2012
Gross inland consumption of energy divided by
GDP (kg of oil equivalent per 1 000 EUR)
700
700
600
600
500
500
400
400
300
300
200
100
100
0
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
2002
0
Bulgaria
Estonia
Romania
Czech Republic
Slovakia
Latvia
Poland
Lithuania
Hungary
Slovenia
Croatia
Finland
Belgium
Cyprus
Greece
Netherlands
Sweden
Malta
Portugal
France
Spain
Luxembourg
Germany
Austria
Italy
Norway
United Kingdom
Denmark
Ireland
200
2001

Sursa: Eurostat , Raiffeisen RESEARCH
Ineficienta companiilor de stat reprezinta o
problema serioasa
Desi contribuie cu doar circa 7% la valoarea adaugata din economie,
companiile de stat contribuie cu circa 24% la totalul arieratelor din economie
20%
52.4
46.2
52.0
9.1
9.0
8.1
8.0
31.1
27.0
5.9
34.9
27.8
28.5
6.2
10.00
6.9
Bugetul general
consolidat
12.2
20.00
13.7
Furnizori
14.1
40%
30.00
13.3
Banci
60%
8.2
40.00
10.0
50.00
80%
34.3
60.00
39.1
100%
34.8
70.00
44.3
Structura arieratele companiilor din
Romania (% din total, decembrie 2012)
68.9
80.00
2012
2011
2010
2008
2007
2006
2005
2004
2003
2002
Companii de stat Companii private
2001
0%
2000
0.00
2009

Arierate/CA Companii private (%)
Arierate/CA Companii de stat (%)
Sursa: Consiliul Fiscal
Competitivitatea economiei este una
relativ scazuta
World Bank Doing Business Report – Ranking (out of 189 countries)
Dealing
with
Ease of Doing Starting a
Constructi
Business
Business
on
Permits
United
States
Germany
Poland
Slovak
Republic
Hungary
Bulgaria
Romania
Czech
Republic
Registerin
g Property
Getting Electricity
Procedure
Cost (% of
Time
s
income Rank
(days)
(number)
per capita)
Getting
Credit
Protecting Paying
Investors Taxes
Trading
Enforcing
Across
Contracts
Borders
Resolving Insolvency
Recovery
Cost (%
rate (cents
of
Rank
on the
estate)
dollar)
Rank
Rank
Rank
Rank
Rank
Rank
Time
(years)
13
25
3
6
64
22
11
1.5
7
81.5
17
47
205
3
137
81
54
28
3
98
52
89
113
14
49
5
55
1.2
3.0
8
15
82.9
54.8
13
37
158
11
65
11
42
115
102
108
65
4.0
18
54.1
38
5
6
7
252
130
223
116
320
534
112
135
174
45
62
70
55
28
13
128
52
52
124
81
134
70
79
76
15
79
53
2.0
3.3
3.3
14.5
9
10.5
38.3
32.6
30.0
70
92
99
6
279
179
146
37
55
98
122
68
75
2.1
17
65.0
29
Rank
Rank
Rank
4
20
34
4
60
16
21
45
111
116
12
88
3
6
17
161
49
108
53
5
54
58
73
59
65
60
47
118
136
75
146
86
Source: World Bank Doing Business 2013-2014 Report
World Economic Forum World Competitiveness Report – Ranking
(out of 148 countries)
1.11 Efficiency of legal framework in challenging regs., 1-7 (best)
1.10 Efficiency of legal framework in settling disputes, 1-7 (best)
1.04 Public trust in politicians, 1-7 (best)
1.07 Favoritism in decisions of government officials, 1-7 (best)
1.08 Wastefulness of government spending, 1-7 (best)
1.09 Burden of government regulation, 1-7 (best)
2.02 Quality of roads, 1-7 (best)
2.05 Quality of air transport infrastructure, 1-7 (best)
6.09 Prevalence of trade barriers, 1-7 (best)
1.20 Protection of minority shareholders’ interests, 1-7 (best)
7.07 Reliance on professional management, 1-7 (best)
1.19 Efficacy of corporate boards, 1-7 (best)
7.01 Cooperation in labor-employer relations, 1-7 (best)
5.08 Extent of staff training, 1-7 (best)
1.17 Ethical behavior of firms, 1-7 (best)
2.04 Quality of port infrastructure, 1-7 (best)
7.05 Effect of taxation on incentives to work, 1-7 (best)
6.04 Effect of taxation on incentives to invest, 1-7 (best)
7.08 Country capacity to retain talent, 1-7 (best)
7.09 Country capacity to attract talent, 1-7 (best)
1.B. Private institutions, 1-7 (best)
2.A. Transport infrastructure, 1-7 (best)
Romania Bugaria
Czech Rep Hungary Poland
128
122
126
138
111
128
125
115
113
119
141
97
146
129
100
137
117
123
116
65
134
86
53
110
93
127
105
135
140
133
145
112
81
73
105
119
83
21
101
103
128
123
68
43
89
128
99
83
80
93
131
112
62
114
79
126
127
88
120
95
139
99
74
83
88
134
127
68
108
75
139
110
109
92
59
123
85
61
84
97
146
109
133
132
105
136
103
132
135
116
138
142
109
126
119
132
144
87
115
121
127
94
93
89
60
122
97
49
71
92
Source: The Global Competitiveness report, World Economic Forum, 2013-2014
World Bank Doing Business Report – Paying taxes, ranking (out of
189 countries)
Rank
Ireland
Estonia
Latvia
Slovenia
Lithuania
United States
Bulgaria
Germany
Slovak Republic
Poland
Czech Republic
Hungary
6
32
49
54
56
64
81
89
102
113
122
124
Kyrgyz Republic
Sierra Leone
Mozambique
Yemen, Rep.
Belarus
Romania
Europe & Central Asia
OECD high income
127
128
129
129
133
134
..
..
Payments
Time (hours Profit tax Labor tax and
Other
Total tax rate
(number per
per year)
(%)
contributions (%) taxes (%)
(% profit)
year)
9
80
12.3
12.1
1.3
25.7
7
81
8.1
39.4
2
49.4
7
264
4.9
27.3
3.7
35.9
11
260
12.9
18.2
1.4
32.5
11
175
6
35.2
1.9
43.1
11
175
27.9
9.9
8.4
46.3
13
454
4.9
20.2
2.6
27.7
9
218
23
21.8
4.6
49.4
20
207
7
39.6
0.6
47.2
18
286
14.1
26
1.5
41.6
8
413
7.7
38.4
2
48.1
12
277
11.6
34.6
3.5
49.7
51
33
37
44
10
39
26
12
210
353
230
248
319
200
246
175
6.2
18.2
30.9
20.1
13.4
10.3
9
16.1
19.5
11.3
4.5
11.3
39
31.5
22.6
23.1
7.7
2.9
2.1
1.4
1.5
1.1
7
2
33.4
32.4
37.5
32.7
54
42.9
38.7
41.3
Source: World Bank Doing Business 2013-2014 Report
Bulgaria
Romania
Czech Republic
Tax or mandatory
contribution
Payments
(number)
Notes on
Payments
Total tax
rate (%
profit)
Social security contributions
1
online filing
20.2
Social security contributions
12
23.5
Social security contributions
1
online filing
24.3
Corporate income tax
1
online filing
4.9
Corporate income tax
4
10.3
Health Insurance
1
online filing
10.2
Fees for municipal services
(garbage collection fee) - Sofia
4
0.9
Health insurance contributions
0
paid jointly
5.9
Corporate income tax
1
online filing
7.7
Stamp duty on property transfer
1
0.9
Medical leave
0
paid jointly
1
Sickness insurance
0
paid jointly
2.6
Vignette
1
0.4
Building tax
2
1
Property transfer tax
1
Real estate tax on the land and
building
1
0.3
Unemployment contribution
0
paid jointly
0.6
Unemployment contribution
0
paid jointly
1.4
Vehicle tax
1
0.1
Accident risk fund
0
paid jointly
0.4
Road tax
1
online filing
0.1
Fuel tax
1
..
Guarantee fund
0
paid jointly
0.3
Real estate tax
1
Value added tax (VAT)
1
online filing
..
Vehicle tax
2
0.1
Value added tax (VAT)
1
online filing
..
Final/one-off tax on certain
expenses
1
online filing
..
Firm tax
2
0
Fuel tax
1
..
Totals:
13
Urbanism tax
1
0
Totals:
8
48.1
Land tax
2
0
Value added tax (VAT)
12
..
Environmental taxes
1
..
Fuel tax
1
..
Stamp duty on contracts
0
Totals:
39
27.7
Tax or mandatory
contribution
Payments
(number)
Hungary
Notes on
Payments
Total tax
rate (%
profit)
Tax or mandatory
contribution
Payments
(number)
Notes on
Payments
Total tax
rate (%
profit)
1.8
0
..
42.9
Poland
Slovak Republic
Payments
(number)
Notes on
Payments
Total tax
rate (%
profit)
Social tax
1
online filing
30.5
Local business tax
1
online filing
5.9
Corporate income tax
1
online filing
14.1
Corporate income tax
1
7
Corporate income tax
1
online filing
5.8
National disabled fund
0
paid jointly
4.2
Tax on interest
0
0.5
Rehabilitation contribution
1
online filing
2.4
Labor fund
0
paid jointly
2.8
Property tax
4
0.4
Training contribution
0
paid jointly
1.7
Property tax
1
1.4
Motor vehicle tax
1
0.2
Special tax
1
online filing
1.4
Guaranteed employees' fund
0
0.1
Fuel tax
1
..
Property tax
1
online filing
0.9
Transport tax
2
0.1
Value added tax (VAT)
12
..
R&D Tax
1
online filing
0.9
Fuel tax
1
..
Totals:
20
47.2
Land tax
1
online filing
0.2
Value added tax (VAT)
12
..
Vehicle tax
1
online filing
0.2
Totals:
18
41.6
Fuel tax
1
Value added tax (VAT)
1
Environmental tax
1
Totals:
12
Tax or mandatory
contribution
..
online filing
..
..
49.7
Notes on
Payments
Total tax
rate (%
profit)
Tax or mandatory
contribution
Payments
(number)
Notes on
Payments
Total tax
rate (%
profit)
1
online filing
18.9
Social security contributions
1
online filing
39.6
Tax or mandatory
contribution
Payments
(number)
Social security contributions
paid jointly
VAT rate
28
27
26
25 25
24 24
24
23 23 23 23
22
22
21 21 21 21 21 21
20
19
20 20 20 20 20 20
18 18
18
16
19.6
21.3
15
Source: European Commission
HU
SE
DK
RO
FI
PT
PL
EL
IE
IT
EU-27
NL
LT
LV
ES
CZ
BE
UK
SK
SI
AT
EE
BG
FR
DE
MT
CY
LU
14
Top personal income tax rates
50
49
43.6
44
45
46
50 50.2
51.1
52
52
NL
54
ES
59
53 53.7
55.6
56.6
47.3 47.5
41
38.5 38.9
39
35
34
32
29
24
15
16
16
RO
19
HU
21
22
24
25
14
10
SE
DK
BE
PT
FI
FR
SI
AT
DE
IT
EL
UK
LU
IE
EU-27
CY
MT
PL
SK
LV
CZ
EE
LT
BG
9
Source: European Commission
Top statutory tax rate on corporate income
39
34
34
35
36.1
31.4 31.5
29.2
19
23
25
NL
16
19
PL
15
LT
14
15
LV
19
CZ
20.6 21
22
UK
24
SK
24.5
23 23.2
25
DK
29
25
29.8 30
26
17
10
10
BG
CY
12.5
FR
MT
BE
PT
IT
ES
DE
LU
EL
AT
FI
EU-27
SE
EE
HU
SI
RO
IE
9
Source: European Commission
Social security contributions
70
59
60
50
34.75 35.09
36.25 36.46
38.2
39.5 39.7
44.9544.96 45
45.5
25.02 25.8
20
14.75
7.79
10
17.21
10.5
Source: European Commission
FR
SK
NL
BE
HU
CZ
EL
RO
LT
PL
DE
AT
SI
IT
ES
LV
PT
BG
UK
LU
SE
IE
CY
FI
0
DK
0
33.2
EU-27
30.3
30
33
EE
40
42.19 43.2
49.4
48 49.05
What employers must spend to pay each net euro to an employee
Sursa: Molinari Economic Institute, The Tax Burden of Typical Workers in the EU 27, 2013
Disparitati regionale foarte mari
PIB nominal per capita (2011, % din media nationala)
SM
BH
BT
MM
SV
IS
BN
SJ
HR
MS
HD
CS
(100%, 125%]
SB
VL
GJ
BV
AG
MH
DJ
VS
BC
AR
TM
(125%, 150%]
NT
CJ
AB
> 150%
DB
CV
PH
IF
B
OT
TR
GR
VN
BZ
GL
BR
TL
(75%, 100%]
IL
CL
CT
(50%, 75%]
<= 50%