CEC REGIONAL UPDATE CEE COVID-19 OVERVIEW 22 MAY 2020
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CEC REGIONAL UPDATE
CEE COVID-19 OVERVIEW
22 MAY 2020Table of Contents BULGARIA ............................................................................Error! Bookmark not defined. CROATIA ..............................................................................Error! Bookmark not defined. CZECHIA ..............................................................................Error! Bookmark not defined. HUNGARY ............................................................................Error! Bookmark not defined. POLAND ...............................................................................Error! Bookmark not defined. ROMANIA .............................................................................Error! Bookmark not defined. SLOVAKIA .............................................................................Error! Bookmark not defined.
BULGARIA
(prepared by the CEC Government Relations office in Sofia)
Status of epidemic:
• 2,331 confirmed cases, 120 deceased (as of May 21)
Key economic indicators:
• The National Assembly Committee on Budget and Finance adopted on first reading on May
20 the proposal for introduction of 9% VAT on restaurants and books, including electronic
books. The Bulgarian Ministry of Finance has warned that if VAT for restaurants and books
is reduced from 20% to 9%, VAT for other goods and services has to be increased to 24%,
or corporate income tax should increase to 17%-18%. The draft amendments to the VAT Act
are submitted by the ruling coalition and other parties. According to Finance Minister
Vladislav Goranov, if all proposals for the reduction of VAT rates for certain goods and
services are approved, the damage to the state treasury will amount to nearly EUR 920
million.
• Prime Minister Boyko Borisov announced that in June the government will decide whether to
seek international crediting. The losses for the Bulgarian economy come from
decreased revenues. At this time they amount to EUR 1.7 billion and all sectors want help.
As to the option of Bulgaria using help from the EU for emerging from the crisis, Boyko
Borisov stated that this was money under European programmes and not additional funding.
• Bulgaria’s annual consumer price index (CPI) recorded a 1.8% inflation increase in April, the
lowest since January 2018 and down from 3% in March. During April, CPI shrank by 0.6%
on a monthly basis. It was the second straight month of decline and only the fourth time that
the monthly CPI figure showed deflation during the previous 12 months. Food prices were
0.9% higher compared to March, while non-food and services prices fell by 1.2% and 1.8%,
respectively. Compared to April 2019, food prices were 6.4% higher, with non-food prices
falling by 2.2%, while services prices rose by 0.8%.
Key issues:
• Shopping malls and gyms have reopened on May 18 across Bulgaria following an order by
Bulgaria's Healthcare Minister. In large shopping centres, there must be separate doors for
entry and exit and a mandatory distance of 1.5m must be observed between customers.
Masks are mandatory in all interior spaces and store tenants must provide disinfectants. Food
consumption is allowed only on terraces. It is also allowed to try on clothes and shoes.
Trainings in gyms must be carried out at a distance of 1.5m, with no more than 10 participants
in group activities. All fitness appliances will be disinfected after each client and the service
rooms (bathrooms, changing rooms and toilets) will be used under strict procedures.
• As of May 22, kindergartens and nurseries are allowed to reopen, observing special
measures. When accepting children in the morning, their temperature will first be measured,
after a certain period it will be done only in the presence of symptoms. A note from a doctor
will not be required, but parents will need to sign a declaration of informed consent that they
have voluntarily decided to bring their child to the kindergarten or nursery and that they are
aware of all the hygienic and anti-epidemic measures that need to be implemented.CROATIA
(prepared by CEC's Croatian partner - Vlahovic Group)
Status of epidemic:
• 2237 confirmed cases, 97 deceased (as of 22 May)
Key economic indicators:
• From the middle of March until 15 May, the number of unemployed has risen from 134,000
to 158,618 and the unemployment rate in April was 9.7%. The largest unemployment growth
is in the hospitality sector which directly generates 19.6% of the GDP
Key issues:
• The Croatian Parliament is dissolved and parliamentary elections are going to be held on 5
July; according to the latest opinion poll, the ruling Croatian Democratic Union is keeping its
lead with 30.2% ahead of the Social Democratic Party which would win 27.8% if elections
were held now. A new right-wing party, the Homeland Movement, led by musician Miroslav
Skoro garners the support of 10.1% while no other party is supported by more than 5% of
those polled
• Minister of Tourism Cappelli announced that Croatia would open its borders to the citizens of
Slovakia, the Czech Republic, Hungary and Austria from 29 May, following the video
conference of EU tourism ministers at which countries had been greenlighted to struck
bilateral agreements on tourist arrivals; no restrictions for citizens of both countries have been
applied on borders between Croatia and Slovenia from 18 May
• According to the PM Plenkovic, the government will continue to monitor sectors that took the
hardest hit of the crisis such as tourism, catering and transport in order to extend the job
preservation measures after they elapse at the end of May.CZECHIA
(prepared by the CEC Government Relations office in Prague)
Status of epidemic:
• 8 725 confirmed cases, 304 deceased (as of May 21)
Key economic indicators:
• Year-on-year inflation in the EU fell to 0.7% in April from 1.2% in March and 1.7% in April last
year. In the Czech Republic, consumer prices are growing at the fastest pace from the whole
EU, by 3.3%.
• Production of passenger cars in the Czech Republic dropped by a record 88.5% year-on-
year in April, the Czech Automobile Industry Association announced on May 19. In the period
between January and April, production dropped by over 30%.
Key issues:
• A two-month-long state of emergency declared due to the coronavirus crisis ended at
midnight on May 17. Some of the restrictions introduced in order to curb the spread of the
virus during the state of emergency will remain in place, however, as a part of the Law on
Public Health. Indoor premises of restaurants, pubs and cafes will also remain closed until
May 25 which will bring a further easing of restrictions.
• By mid-June, the Government intends to fully open borders with Austria and Slovakia. Upon
arrival from those countries, it will not be required to have proof of a negative COVID-19 test.
Negotiations will be held next week also with Hungary. If successful, travelling between the
four countries should be operational without issues. The opening of borders with Germany
might be delayed as the cabinet would like to make sure that people from Belgium and
France, countries still considered as risky, will not be coming through Germany. Negotiations
with Poland have only started recently.
• The Government has further updated the rules for wearing masks in public. As of Tuesday,
May 19, people working in intensely hot environments, as well as office workers will not have
to wear masks at the workplace if they observe social distancing requirements. Face masks
will not be obligatory outdoors after May 25 although people will be required to wear them in
shops and institutions and closed public spaces with a high risk of transmission such as
public transport
• The Government has approved the COVID III loan programme for entrepreneurs and self-
employed affected by the coronavirus epidemic and related measures. The third phase of
the interest-free loan programme will allow private banks to provide loans of up to CZK 500
billion to those interested. Self-employed and companies with up to 500 employees can apply
for support. The maximum amount of one provided loan can reach CZK 50 million.HUNGARY
(prepared by the CEC Government Relations office in Budapest)
Status of epidemic:
• 1659 confirmed cases, 473 deceased (as of May 21)
Key economic factors
• Minister of Finance, Mihály Varga provided new GDP data:
In the first quarter, the Hungarian economy performed 2% better than a year ago. The figure
represents a significant decline from 4.4% at the end of last year, showing that the
coronavirus crisis, although only really affecting the very end of the period, has severely
pushed back the Hungarian economy. The economy has already shrunk on a quarterly basis,
by 0.4%. The crisis may peak in April, a recovery may follow in the second half of the year,
so after a 3% decline in 2020, growth may reach 4.8% in 2021. The decisive segment of
growth came from the services sector, where a temporary jump in retail turnover played a
role.
Key issues
• Government measures regarding the epidemic:
o Curfew regulations regarding Budapest are terminated as of 18 May.
o From Monday, the current rural restrictions will apply to Pest County.
o On the countryside further easing is possible. The interior part of restaurants can be
reopened, playgrounds, hotels and pensions may receive guests, free parking will be
maintained until the end of the emergency.
o If the situation does not change, the government can revoke the emergency
authorization by the end of June.
o No schooling will take place until 2 June.
o Restrictions on events are still in effect, but weddings can be held in the countryside
(including Pest County) from 1 June to a maximum of 200 people.
o The government is doubling the budget of the HUF 50 billion foreign economic
support programme launched so far for Hungarian companies that will make
investments this year and thus preserve jobs.
• Two calls for proposals (GINOP) supporting developments related to the technological
renewal of micro, small and medium-sized enterprises were published with a budget of more
than HUF 50 billion. Grant applications will be available from 29 May 2020.POLAND
(prepared by the CEC Government Relations office in Warsaw)
Status of epidemic:
• 20,143 confirmed cases, 972 deceased (as of 21 May)
Key economic indicators:
• Industrial production decreased nearly 25% YoY in April according to new statements of
Poland's Statistics Office (GUS).
Key issues:
• The Council of Ministers, the government adopted the so-called Anti-Crisis Shield 4.0. The
fourth alteration of the government's socio-economic support package was spearheaded by
the Deputy PM Jadwiga Emilewicz and the Development Ministry. Most notably, the
proposed law assumes: temporary measures preventing the takeover of Polish companies
by non-EU investors, support for local government budgets; further facilitations regarding
tenders; subsidies on bank loan interest for companies; credit holidays for those who lost
their primary source of income after 13 March; further tax facilitation, including the right to
deduct donations to social care institutions. (CEC will provide an in-depth overview of the
proposed measures when the bill reaches the Sejm - most likely next week).
• As of Monday, the third stage of easing COVID-19 restrictions was implemented via the
regulation of the Council of Ministers of 16 May 2020 on establishing certain restrictions,
orders and bans in relation to the outbreak of the state of the epidemic. As announced by PM
Morawiecki, the regulation allows for:
o Opening of restaurants and bars but with some limitations (2m distance between
tables, one person per 4m2, disinfection of tables and other sanitary guidelines).
Customers will not be obligated to cover the mouth and nose at the time of
consumption;
o Opening of beauty salons, e.g. hairdressers (requirement to wear masks and booking
visits);
o Increased limit of passengers in public transport.
o As of 17 May, increased limits of the number of participants in religious services – 1
person per 10m2.
• Furthermore, the provisions of the regulation extend the exception from quarantine for
persons crossing the Polish border for work or education purposes in the European Economic
Area, European Union or Poland. Previously, this facilitation was only available to cross-
border workers and students travelling to and from neighbouring states.
• Last Friday the Civic Platform's candidate Małogrzata Kidawa-Błońska pulled out of the
presidential race. Kidawa-Błońska argued that her decision is a result of declining support
and poor polls. The PO's board informed that Warsaw Mayor Rafał Tzaskowski has been
nominated to become the party's new candidate.ROMANIA
(prepared by CEC's Romanian partner - Serban & Musneci Associates)
Status of epidemic
17,585 confirmed cases; 1,151 deceased (as of 21 May)
Key economic indicators
• Number of jobs suspended: 609,614 (170,744 manufacturing industry; 97,621 retail, repair
shops; 99,924 hospitality).
• Number of jobs terminated: 397,808 (70,750 retail, repair shops; 70,252 manufacturing
industry; 58,580 constructions).
Key issues:
• Parliament passed a decision approving the state of alert in Romania valid for the next 30
days. Lawmakers also amended the initial form of the government decision. Some main
changes include keeping hospital management changes in the responsibility of local
authorities (thus securing politically-appointed managers), providing free masks to
disadvantaged persons and families, and allowing for some cultural events to take place in
accordance to the conditions jointly established by order of the Ministry of Health and the
Ministry of Culture”. Prime Minister Ludovic Orban on Wednesday stated that by Thursday
evening all ministries would adopt common orders regarding the rules of conduct in each
field of activity during the state of alert.
• Prime Minister Ludovic Orban had a meeting on Thursday, with Polish Prime Minister
Mateusz Morawiecki. The Polish Development Fund model was presented, with the talks on
this topic to be continued at the level of expert teams of Romania and Poland. In this context,
also discussed was "the possibility to organise the next joint government meeting, by the end
of this year," depending on the development of the epidemiological situation.
• PSD’s Marcel Ciolacu, ProRomania’s Victor Ponta and ALDE’s C.P. Tăriceanu announced
this week the strategy that parliamentary majority is going to adopt: a series of simple motions
against PNL ministers followed by a no-confidence vote set to take place this summer. For
that, the Parliament will not go into summer recess, working through July and August in
extraordinary sessions. What comes after Orban? A National Union government, argues
Ciolacu.
• After months of MPs requests to present a report on the government’s response to the COVID
crisis, PM Ludovic Orban adressed the Parliament on Monday (May 18). Orban praised the
solid economic growth in Q1 (+2.7% - Eurostat) and announced a shift in the growth model:
from wage-led-growth to profit-led-growth (generated by innovation, competitivity and
increased processing capacities) doubled by the creation of the Poland-inspired Investment
Fund, and massive public investments in energy, healthcare, transport infrastructure. On
Thursday, May 21, during a governmetn session, Finance Minister Cîțu announced he will
unveil the relief pack for large companies next week. Minister of Economy Virgil Popescu
announced that mid-June brings support programs for SMEs (Start-Up Nation, programs for
micro-industrialization and retail and services companies). Microgrants go up to 450,000
RON for investments, and up to 250,000 RON for Start-Up Nation.
• National Anticorruption Directorate DNA chief prosecutor Crin Bologa announced on
Thursday that anti-corruption prosecutors have registered 33 cases in connection with the
awarding of health procurement contracts during the coronavirus pandemic.
• This week Minister of Labour Violeta Alexandru had an official meeting with the German
Minister of Labour Hubertus Heil. The main point on their agenda: rights of seasonal workers.SLOVAKIA
(prepared by the CEC Government Relations office in Bratislava)
Status of epidemic (as of 21 May):
• 1,502 infected, 28 deceased (as of 21 May)
Key economic indicators:
• Slovakia's GDP fell by 3.9% y-o-y in Q1 2020, unemployment in April increased to 6.57%
from 5.19% in March
• The government expects a deficit of 8.4% of GDP, public debt 61.2% in 2020
Key issues:
• As of 20 May, Slovakia introduced further measures for easing of economic restrictions.
Shopping malls opened and shop entry is now allowed for one customer per 15 square
meters of a shop (previously 25 square meters). Cinemas, theatres and almost all indoor
tourist attractions can open. Public events with less than 100 people can take place.
Restaurants can open the interior premises. Kindergartens and elementary schools (1.-5.
grade) can open as of 1 June. Moreover, as of 21 May, travellers to Poland, Czechia,
Hungary, Austria, Slovenia, Croatia, Germany, Switzerland will not need COVID-19 tests and
do not have to go to quarantine if they return within 24 hours. (Permission based on a pre-
filled paper form to be handed to border police). Further measures are to be considered
around 3 June.
• The state will provide funds for guaranteeing a bank loan or waiving the fee for loan
guarantees. This will provide the necessary liquidity not only for small and medium-sized
enterprises but also for large businesses. Companies receiving funds should maintain the
level of employment during the period specified in the loan agreement.
• Slovakia is extending border checks until 26 June. However, the list of operational border
crossings will increase. Czech Republic and Austria are considering fully opening their
borders to Slovakia as of 15 June, however, Slovak Government still wants to wait for the
development of the epidemiological situation. Civil aviation could be renewed as of July.
• Slovakia introduced a smartphone app enabling people returning to Slovakia to go into home
quarantine. The app will ask the user in irregular intervals to take a photo to check the home
quarantine and it should be fully operational as of 22 May. Moreover, the government also
supports the EU-wide contact tracing app based on Google/Apple API and will join the
initiative.
• After shops became mandatorily closed for disinfection on Sundays during the COVID-19
crisis, public discussion about keeping this measure long-term came again to the forefront.
Positions within Government are split. Large stores and shopping centres are against,
claiming that Sunday is the strongest day of the week with the revenues accounting for as
much as one fifth of whole turnover.
• The government reached an agreement on reimbursement of rent to shop owners that had
to close due to COVID-19 measures. If the owner decides to waive 50% of rent, the
government will also contribute 50%. If 40%, Government gives 40% and shop owner will
pay 20%. If the owner of the premises insists on the full sum to be paid by the shop owner,
the shop owner can repay the debts in instalments divided over 48 months. The initiative of
Slovak retailers welcomed this move.You can also read
