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AHK Romania: Economic growth based on investments is the key to unblocking economy

May 5, 2025

Taxes, foreign investments doubled by state investments in key areas such as energy, inflation, the trade war triggered by the United States with the European Union, as well as solutions for reducing the budget deficit were the main topics of discussion of the Romanian-German business community at the members' meeting in April.According to a press release of the Romanian-German Chamber of Commerce and Industry (AHK Romania), the president of the Fiscal Council, Daniel Daianu, was also present at the meeting.The same source mentions that both the representatives of companies and the president of the Fiscal Council were of the opinion that an increase in taxes will not solve the problem of the budget deficit, exceeding 9%, that Romania has.Volker Raffel, member of the Board of Directors of AHK Romania and CEO of E.ON, explained that only investment-based economic growth, which boosts competitiveness, is the key to "unblocking the economy" and not "taxes, which come from time to time, surprisingly or not, and which do not really help investment decisions.""A study on our natural gas and electricity distribution sector proposes solutions to unblock investments in this sector with small increases in distribution tariffs. The condition is that the amount invested is large, so as to bring a substantial increase in GDP, with a multiplication factor of 1 to 10. Another study, conducted by Deloitte for the Energy Employers' Federation, shows that one billion euros invested in onshore energy in Romania brings an increase in GDP with a multiplication factor of 1 to 9," Raffel stated, quoted in the press release.For his part, Daniel Daianu believes that bringing the budget deficit down to 3% of GDP cannot be done only by reducing budget spending and tax evasion, because the current deficit of about 9% of GDP is very large, the largest in the EU."Is it a fair system, one in which some people, some companies pay their taxes and others practice tax evasion and avoid taxes on a large scale? In this case, society is the one that loses, and the government is forced to increase taxes to reduce the deficit. In many states, including the USA and countries in Europe, there is a progressive tax system, which allows for a redistribution of income to those who do not have the resources for a decent life, and not because they are lazy; I am referring here, for example, to the aid granted to young people who have potential, but who do not have access to the education they want," explained Daianu.He underscored that taxes will increase if the budget deficit cannot be reduced through better tax collection.Daniel Daianu also mentioned that developments in Romania depend greatly on what is happening on the European and international levels. The tariffs imposed on Europe by the US are causing a lot of concern, especially since they are overlapping with other crises triggered by the pandemic and the war in Ukraine, which has increased the price of energy in Europe."Companies in Europe pay 3-4 times more for energy than American ones," he said, adding that the institution he heads, the Fiscal Council, had forecast economic growth for Romania of 1% - 1.5% this year, but did not take into account a trade war."A new recession may come, possibly a big one. (...) In this context, it is very important for Europe to have a defence capacity, to make investments in this field, to create joint projects," Daianu also said, specifying that this is about defence and not rearmament.In conclusion, Daianu mentioned that defence and competitiveness are the two directions that Europe and Romania should head towards.The same idea was also emphasised by the general director of AHK Romania, Sebastian Metz, at the end of the debate. He showed that it is important for Romania to initiate reforms, reduce bureaucracy and support increased competitiveness at all levels, and for this, investments are necessary, especially in several essential sectors, such as education, research, energy or transport."Only by investing in areas that produce economic growth can tax revenues be generated, which in turn will stabilize the budget situation in a sustainable way," explained Metz. He also mentioned that the difference between capital and labour taxation in Romania is relatively large, and future intentions regarding the change of fiscal policy should not put an additional burden especially on the labor factor.The meeting of the members of AHK Romania, with the theme "Romania's economic situation in the current geopolitical context and the challenges, respectively the country's chances for the future," was attended by over 70 representatives of member companies.

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