CEC REGIONAL UPDATE CEE COVID-19 OVERVIEW 5 JUNE 2020
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CEC REGIONAL UPDATE
CEE COVID-19 OVERVIEW
5 JUNE 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, 560 confirmed cases, 146 deceased (as of June 3)
Key economic indicators:
• The average value of interest-free loans taken by individuals due to COVID-19 is
approx. BGN 4,300 (EUR 2,199). The maximum amount that can be withdrawn under this
measure is EUR 2,300. By the end of May, the applications of over 5,000 people were
approved, and loans totalling about EUR 11 million were provided.
• In April, the profit of banks in Bulgaria shrank by nearly 60%, data from the Bulgarian National
Bank indicates. At the same time, in April, banks reported much lower revenues from fees
and commissions. This is also due to the stagnation caused by anti-virus measures, which
have blocked many businesses and led to fewer bank and card payments.
• The forecasts are that in 2021 Bulgaria will be able to restore its economic conditions to a
pre-pandemic status. Even for the first quarter, the results are better than the first 3 months
of 2019, Bulgaria's Minister of Economy Emil Karanikolov said.
• Bulgaria’s economy grew by 0.3% in the first quarter of the year, according to preliminary
data announced by the National Statistical Institute (NSI) on June 4. Compared to the same
period of 2019, economic growth in the first quarter was 2.4%. In real terms, gross domestic
product (GDP) in Bulgaria in January-March was 25.58 billion leva, or EUR 13.08 billion.
Key issues:
• “The “United against Covid-19” fund has helped 700,000 people in need during the
pandemic,” said Krasimira Velichkova, Executive Director of the Bulgarian Donors Forum.
The fund has raised BGN 1 million (around EUR 500,000), money used to implement projects
in 300 towns and villages.
• As of June 1, Bulgaria will be open for tourists from 29 countries, the Ministry of Tourism has
announced. The obligatory 14-day quarantine for those entering Bulgaria from EU countries,
Serbia and North Macedonia has been abolished. The quarantine is still in force for persons
arriving from 8 European countries, which still have a high incidence of COVID-19. These
are Sweden, Belgium, Ireland, Portugal, Spain, Malta, Italy, the United Kingdom and Northern
Ireland. The list of countries is subject to update depending on the development of the
epidemic situation and government decisions.
• On June 15, the emergency epidemic situation related to the COVID-19 pandemic ends. After
this date, only social measures will remain in force, announced Prime Minister Boyko Borisov.CROATIA
(prepared by CEC's Croatian partner - Vlahovic Group)
Status of epidemic:
• 2247 confirmed cases, 103 deceased (as of 4 June)
Key economic indicators:
• Croatian economy grew by 0.4% in the Q1 which is the slowest growth in the past six years,
state budget revenues from taxes in May fell by 50% year-to-year while the total value of
invoices in May decreased 18%.
• The number of unemployed from the end of March until June has increased from 143,461 to
157,893 (+10%), while the Minister of Labor reported that in the second half of May there has
been a decline in unemployment and an increase in employment.
• The figures show that demand for workers is about 40% less than at the same time last year.
The lowest employers’ demand is for the once most sought-after jobs of shop assistants,
waiters and cook, which decreased by over 70%.
Key issues:
• The Croatian Institute of Public Health announced that the result of serological research
shows a low population infection rate with COVID-19 of only 2%; the Health Minister
assessed the current epidemiological situation as "more than satisfactory" (only 4 newly
infected in the last 13 days) and added that the end of the epidemic will be declared following
the 14 days from last registered COVID-19 case.
• The government is to sign an agreement with the European Commission for temporary
financial support to reduce the risk of unemployment, aimed at introducing a working time
reducing program based on the principle that the state co-finances one working day a week;
the measure should be defined by the end of June and will replace the current support to
employers by which the state co-finances the payment of workers' monthly salaries with EUR
533.
• Currently, 40,000 tourists are in Croatia while over 86,000 have announced their arrival in
Croatia through the Ministry of the Interior's “Enter Croatia” website and most of them are
from Slovenia, Germany and Austria; Croatia is now at 13% in terms of tourist traffic
compared to last year, and the Tourism Minister believes that it will reach one-third of the last
year’s results by the end of the year.CZECHIA
(prepared by the CEC Government Relations office in Prague)
Status of epidemic:
• 9 441 confirmed cases, 324 deceased (as of June 4)
Key economic indicators:
• On Wednesday, Czech Minister of Finance Alena Schillerová said that the country’s budget
deficit could reach CZK 500 billion this year. The currently planned deficit was approved last
month and at CZK 300 billion, but Ms Schillerová refused to dismiss the possibility of raising
the limit. Before the coronavirus pandemic, the Czech government planned a deficit of CZK
40 billion in its 2020 budget.
• Czech economic growth slowed by 2% in Q1 2020, compared to the same period last year,
according to revised data released by the Czech Statistics Office this week. The refined
estimate confirmed the deepest year-on-year decrease in Czech GDP since the beginning of
2010. Nevertheless, it is still an improvement on the first estimate, which predicted a year-
on-year drop of 2.2%.
Key issues:
• The Government approved an updated list of European countries based on the travel
restrictions related to Covid-19. Using the "traffic lights principle", the countries are marked
as green, when considered as low risk (e.g. Germany, Austria, Hungary), the orange mark
represents the medium risk (e.g. France, Spain, Italy) and the red mark is used, when the
Covid-19 development in the country is seen as high risk (Sweden and the UK). Starting June
15, the ‘traffic lights’ system will be applied.
• Since June 4, travel rules between the Czech Republic and Slovakia were restored to the
state in which they were before the COVID-19 pandemic, PMs of both countries announced
in Prague on Wednesday. According to Czech Prime Minister Andrej Babiš and his Slovak
counterpart Igor Matovič, the opening of borders was agreed two days ago and was
announced as a gift on the occasion of the Slovak Prime Minister's first visit to the Czech
Republic. Two PMs also discussed the V4 standpoint on the recently introduced EU rescue
deal. Currently, the members are split, with Czech Republic and Hungary being against the
deal, while Poland and Slovakia have voiced their support.
• Czechia will be able to use public money to contribute to companies affected by coronavirus
restrictions on the payment of rents. The European Commission has approved Czech state
support in the maximum amount of CZK 5 billion (EUR 190 million) in the form of direct grants.
• The Czech state looks set to waive social security contributions from companies with 50 or
fewer employees between June and August, on condition that they don’t let more than
10% of staff go, or cut wages by 10% or more of March levels. The measure has been
approved by the Chamber of Deputies and will be discussed in the Senate.HUNGARY
(prepared by the CEC Government Relations office in Budapest)
Status of epidemic:
• 1,210 confirmed cases, 539 deceased (as of 4 June)
Key economic factors:
• Minister of Finance Mihály Varga, argued recently that the government has diverted
resources so that the 2021 budget could be focused on combatting the epidemic and
protecting the economy. The minister highlighted that job creation remains one of the top
priorities, underlining the importance of a stable fiscal policy, supporting families, protecting
pensioners and guaranteeing the real value of pensions.
Key issues:
• PM Orbán announced that national consultations are being launched on coronavirus and
measures to restart the economy. The National Consultation will be carried out by the
government in June.
• The EP delegation of Fidesz-KDNP announced that the current multiannual financial
framework and recovery fund do not provide hope for Hungary. Head of the delegation, MEP
Tamás Deutsch, gave an interview arguing the following: he considers it as a success that
the new recovery instrument has not been established at the expense of sources of the
multiannual financial framework. However, the source of the recovery fund will be ensured
by long-term loans by the EC. Loans will be paid back in 30 years by the Member States in
proportion to their payments into the multiannual financial framework, which is 1% in the case
of Hungary. This means that Hungary will have to pay back 1% of the package worth EUR
750 billion, EUR 7,5 billion. Compared to this debt, it is unacceptable that Hungary would
receive only EUR 8,1 billion, a slightly higher amount than the debt itself. According to
Deutsch, the proposal is not hopeless, but the PM and MEPs will have to negotiate toughly
to improve Hungary’s position. PM Orbán also rejected the recovery fund in its current form.
• The government submitted bills revoking emergency authorization and terminating
exceptional law order. One of the two bills contains the repeal of the Coronavirus Control Act
and the elimination of the emergency situation and the other contains related transitional
rules. According to government plans, the Parliament can make a decision on this within two
weeks, so that the emergency situation and the special legal order may end in mid-
June. However civil right protection NGOs are concerned. PM Orbán said the epidemic is not
over and, according to experts, is likely to return in the fall for a second wave. He said the
Chief Medical Officer will be given strengthened powers and the Operational Group will
remain. Although exception law order will be terminated, many regulations remain in force,
such as the separate purchase time for the elderly and the prohibition of holding mass events,
especially in indoor venues.POLAND
(prepared by the CEC Government Relations office in Warsaw)
Status of epidemic:
• 25,048 confirmed cases, 1,117 deceased (as of 4 June)
Key issues:
• The Sejm passed the bill referred to as the Anti-Crisis Shield 4.0. Now, the law was directed
for works in the Senate. The next Senate session is planned for June 17th, and there have
been no statements which would suggest that senators could convene sooner. Throughout
works in the lower chamber, MPs submitted 126 amendments to Shield 4.0. Those proposed
by the ruling party were accepted. Still, Deputy Development Minister Marek Niedużak said
that some opposition proposals require further works and could still be hammered out in the
Senate. Previously government figures argued that Shield 4.0 would be the last
comprehensive law to aid employees and employers during the COVID-19 crisis. While
smaller amendments are likely to be introduced in the coming weeks and months, a
5th iteration of the Shield is not expected.
• As expected, the first round of the Presidential Election will take place on June 28th. Speaker
of the Sejm Elżbieta Witek made the formal announcement following the passing of the
special election law and statements from the State Electoral Commission (PKW).
• President Andrzej Duda has also submitted a draft bill to parliament, which assumes a
monthly payout of PLN 1400 for persons who lost their job due to the ongoing epidemic. This
aid would be paid for a duration of 3-months. However, the opposition argues that this is part
of the President's election campaign.ROMANIA
(prepared by CEC's Romanian partner - Serban & Musneci Associates)
Status of epidemic
• 19,907 confirmed cases; 1,299 deceased (as of 4 June)
Key economic indicators
• After June 1 the Ministry of Labor no longer stopped the daily release of the list of
suspended/terminated contracts.
• As of June 1, the Gov’t, through the Ministry of Labour pays 41.5% of the average wage for
employees returning to their full-time jobs after being furloughed. The same incentive applies
to employers hiring youth (16-29 y.o) and people over 50.
Key issues:
• Romania could lift the obligation to wear masks indoors when there will be no new cases of
the coronavirus disease or outbreaks in the country, Health Minister Nelu Tataru announced
on Thursday. The Minister of Health also pointed out that as the number of coronavirus cases
decreases, support hospitals will gradually resume their normal activity.
• SMEs and microenterprises will get EUR 1 billion in grants under the future economic
recovery package prepared by the Government, according to economy minister Virgil
Popescu. He added that companies with a single employee, who is also the owner, will be
eligible to receive a grant of EUR 2,000. Minister of Economy, Energy and the Business
Environment, Virgil Popescu, said that he wants the evaluation for projects for SMEs that will
access the EUR 1-billion non-refundable grants scheduled to start in July, so that the infusion
of money in the economy would be faster.
• Romania's president, Klaus Iohannis, announced on June 3, that the Government would
come up in the next period with a bill to amend the laws of justice and "repair what the Social
Democrats have destroyed." "The Social Democrats tried to suppress justice," Iohannis said
at the end of a discussion with prime minister Ludovic Orban at the Cotroceni Palace. In the
coming weeks, consultations will follow, and the Government will work on the bills that it will
later submit to the Parliament, according to the president.
• Iohannis announced that Romania will start negotiations for the money to receive within the
European Union’s recovery plan recently announced by the EC, a plan which Iohannis finds
“suitable for Romania”. "The first negotiations are kicking off during the European Council
due on June 18-19”, Iohannis stated.
• The future economic situation will depend mainly on developments in public health and their
succession, and the EU package for recovery from the COVID-19 crisis will certainly have an
important contribution in supporting our relaunch efforts, considers the governor of the
National Bank of Romania (BNR), Mugur Isărescu. He stressed that the initial economic
impact of the pandemic was strong, further exacerbating existing imbalances, amid growing
pressures associated with food supply, the depreciation of the national currency and
increased need for liquidity. Thus, taking into account the magnitude of the economic decline
in April, the official estimates on GDP growth for the second quarter indicate a contraction of
14% in economic activity compared to the previous quarter.SLOVAKIA
(prepared by the CEC Government Relations office in Bratislava)
Status of epidemic:
• 1,526 confirmed cases, 28 deceased (as of 4 June)
Key economic indicators:
• State budget deficit widened by over €700 million in May, reaching €3.136 billion - it thus
more than doubled y-o-y and exceeded by over 13% the amount budgeted for the full year .
• Slovak unemployment rose by 1.2 percentage point m-o-m in April to 6.8% from 5.6% in
March.
Key issues:
• The government allowed all indoor establishments (shops, restaurants) to have one customer
per 10m2 and it also scrapped the limit on the number of people at the table and closing
hours at 22:00 for bars and restaurants. Opening hours for the elderly in shops are removed
but shops have to remain closed on Sundays for disinfection. Mass public events with less
than 500 people are allowed as of 10 June and gatherings with max. 1000 people will be
allowed from 1 July until the end of the year. All indoor sports centres, swimming pools,
wellness, spa or massages can resume operations as well. Face masks are no longer
mandatory in exterior if the distance between people is more than 2 meters but they remain
mandatory in the interior.
• On 3 June, Prime Minister Igor Matovic and Czech Prime Minister Andrej Babis jointly
announced the resumption of free unrestricted movement between the two countries.
Moreover, residents from Hungary are still allowed to enter Slovakia for 48 hours without
being obliged to undergo domestic and state quarantine and without showing a negative test
for COVID-19. International public transport to specific countries will be renewed once there
is a full opening approved in relation to the other country.
• PM Igor Matovic continues to keep the country in a state of emergency in spite of the
improved epidemiological situation. Main reasons mentioned included e.g. facilitated supply
of protective materials to hospitals. This decision is harshly criticized by the opposition (but
also coalition partners) and former Prime Minister Peter Pellegrini (SMER) called on lifting
the state of emergency as well as the ban on gatherings. PM Matovic leaves this question to
lawyers and crisis staff, which should discuss the state of emergency next week.
• While the government originally talked about €1 billion in state aid, companies received only
a little over €140 million for March and April. Surveys among entrepreneurs confirm that low
value of payments from the state are one of the main barriers for applying for assistance -
one-third of the questioned companies replied that the support amount discouraged them
from applying for it due to excessive red tape.
• Slovak Investment Holding (SIH) released the second part of anti-COVID loan guarantees to
the banks. Banks can apply for the funds after using up 70% of allocated money from the first
stage and several banks have already asked for this second round of funding due to high
interest from companies. Banks are also in negotiations about another aid scheme in value
of €500 million monthly for the whole bank market.You can also read
