CEC REGIONAL UPDATE CEE COVID-19 OVERVIEW 12 JUNE 2020
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CEC REGIONAL UPDATE
CEE COVID-19 OVERVIEW
12 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:
• 2,993 confirmed cases, 167 deceased (as of 11 June)
Key economic indicators:
• The coronavirus crisis will shrink the global gross domestic product by 5.2% in 2020.
According to a World Bank forecast, the Bulgarian economy will decline by 6.2% in 2020 and
recover next year with a growth of 4.3%.
• According to a recent poll, only 9% of employers in Bulgaria plan to hire new employees this
summer. 15% plan to reduce their teams, and 67% do not plan to change the number of their
staff.
Key issues:
• The National Assembly approved the reduction of VAT from 20% to 9% for restaurant and
catering services, books, baby food, diapers and sanitary items. The reduction in VAT is a
temporary measure to support COVID-19 affected businesses. It will be in place until 31
December 2021.
• The Bulgarian government’s “60:40” business assistance measure will be extended until the
end of September and possibly to the end of the year, Prime Minister Boyko Borisov said at
a Cabinet meeting on June 8. The measure provides for the Bulgarian state to pick up 60%
of an employer’s payroll costs, with the employer obliged to pay the remaining 40%.
• The government extended the emergency epidemic situation until the end of June. Minister
of Health Kiril Ananiev commented that all of the orders he has issued regarding
precautionary measures remain in force. The temporary restrictions on entry into Bulgaria of
citizens from third countries, with the exception of the citizens of Montenegro, Bosnia and
Herzegovina, and Serbia, also remain in place.CROATIA
(prepared by CEC's Croatian partner - Vlahovic Group)
Status of epidemic:
• 2249 confirmed cases, 106 deceased (as of 11 June)
Key economic indicators:
• Fitch Ratings has affirmed Croatia's Long-Term Foreign-Currency Issuer Default Rating
(IDR) at 'BBB-', the Outlook is Stable; Fitch revised estimate for economic contraction in 2020
to -8.4 % (from 5.5 % in March) in line with a more pronounced impact of COVID-19 on key
service industries such as tourism
• Fitch assumes an aggregate fall in Croatian tourism of 70% in 2020 (from 50% previously),
reflecting widespread lockdown measures in 2Q20 and the likely negative effects of the crisis
on the global travel industry and consumer spending in the rest of the year.
• In the latest global economic forecasts, the World Bank predicts a 9.3% drop in Croatian
GDP this year, and 5.4% increase next year, according to which Croatia would have the
largest fall in GDP in the region of European and Central Asian countries.
Key issues:
• Hungary opened its borders without restrictions for Croatian citizens as of today while Austria
will do the same on June 16.
• Minister of Internal Affairs Davor Bozinovic pointed out that Croatia is currently the only EU
Member State with active tourism and heavy traffic at the border crossings and added that
the gov’t will help Croatian tourism to become a champion at the European level
• On the beginning of the first long weekend after the relaxation of epidemiological measures,
235,035 foreign citizens have already entered or announced their arrival through the “Enter
Croatia” platform.
• Tourism Minister Cappelli reiterated that he expects 30% of last year's tourist result to be
achieved this season and commented that the gov’t will launch its own booking platform
counterpart of booking.com: “there is a problem in the EU of portals that do not pay taxes
anywhere, because it is not known where they are based”.CZECHIA
(prepared by the CEC Government Relations office in Prague)
Status of epidemic:
• 9 855 confirmed cases, 328 deceased (as of June 11)
Key economic indicators:
• The rate of unemployment in Czechia rose to 3.6% in May, which is a slight 0.2% increase
from the previous month. This is the highest number since March 2018. Nevertheless, it still
remains one of the lowest in the EU. Experts say that the unemployment rate will slowly rise
in the following months.
• The industrial sector has slumped by a third in April, which is a record number since Czechia
entered the EU. This comes as a consequence of lower demand in the international market,
orders in some areas dropped by 50%. This is seen as a reaction of the Czech economy
closely tied to the German car producing industry. In the construction industry, the decrease
in April was around 4.6%.
• The Minister of Labour and Social Affairs Jana Malacova (CSSD) implied that she expects
almost 400 000 new unemployed, which would soar the unemployment rate up to 7%.
Especially employees in tourism and transport, among the most his sectors, is expected to
request support at the Labour Office in the following months. For this reason, the Ministry will
amend administrative practices, and the unemployed will be able to register during their
notice period, which aims at preventing queues at Labour offices.
Key issues:
• The Government approved a CZK 500 billion (EUR 19 billion) budget deficit. After the initial
deficit of 40 billion was consecutively increased to 250 and 300 billion, this should be the final
number. The proposal is to be discussed in Parliament.
• The Minister of the Interior announced his intention to introduce a complementary tool to the
“State of Emergency”. The so-called “State of Danger”, should be a softer version of the
former. This tool is already in the disposition of the Regional Governors and Prague Mayor,
but not the Government. The “State of Danger” should be declared in cases of cyber attacks
or increased threat of epidemics etc.
• The smart quarantine project together with the application eRouska (eFacemask) seems to
be at a stalemate. Reportedly, there are some 218 000 users, who voluntarily send their
location via Bluetooth. Nevertheless, if the smart quarantine is to work properly, a much
higher number of users is needed. The patron of the project, Roman Prymula, says that
around 7 million users would be necessary.
• Anti-government protests took take place in nearly 150 towns and cities around the country
this week. The protesters contested the way the Government dealt with the crisis, especially
the dubious purchases of health equipment in China. The protests were limited to 500 people,
and social distancing was respected.HUNGARY
(prepared by the CEC Government Relations office in Budapest)
Status of epidemic:
• 1121 confirmed cases, 551 deceased (as of 10 June)
Key economic factors
• Hungary’s consumer price index increased by an annual 2.2 % in May, according to data of
the Central Statistical Office.
Key issues
• Restrictions on the Hungarian-Croatian border will be lifted on 12 June.
• A National Consultation is being launched - 13 questions will be sent to citizens via post,
answers may be submitted online or via post by 15 August. Hungarians will be asked whether
they support free Internet for teachers and families raising children of school age during an
epidemic; whether they agree with the principle that banks and multinational companies have
to contribute to costs of epidemiological protection.
• The state of emergency will be terminated. A bill has already been submitted and will be
discussed by parliament on 16 June.
• Minister of Foreign Affairs, Péter Szijjártó called on the EU to let Member States raise their
job protection support for companies above EUR 800,000, the current limit for job protection
or modernisation funding.POLAND
(prepared by the CEC Government Relations office in Warsaw)
Status of epidemic:
• 28,201 confirmed cases, 1,215 deceased (as of 11 June)
Key issues:
• As of Saturday 6 June, the final stage of the government's plan on lifting restrictions has been
fully implemented. While the government has fulfilled its 4-stage plan, it does not mean a full
return to the pre-epidemic way of functioning. Social distancing rules still apply.
• PM Morawiecki announced the decision to re-open Poland's borders. As of 13 June, Poland
will restore full border traffic on its borders with the European Union member states. This
decision is in line with the recommendations of the European Commission, which proposed
that internal border controls in the EU be lifted from 15 June 2020. The Border Guard and
other services will only carry out random checks - just like before the epidemic. This decision
means that persons within the EU will be able to move freely across the Polish border.
Additionally, the 14-day obligatory quarantine will no longer be imposed. Also, as of 16 June,
the government plans to restart international flights to and from Poland.
• Head of the Polish Development Fund (PFR) Paweł Borys announced that the Fund will be
launching the last part of its Financial Shield – support for large enterprises. Borys announced
that negotiations with the European Commission ended last week and that, while the Fund
is waiting for a final go-ahead from the EC, the PFR will be launching the application process.
Over 600 large companies have already expressed their interest in the Shield, which has
PLN 25 billion earmarked for the segment. In other segments, the PFR has already paid out
over PLN 46 billion to nearly 250 thousand companies.
• The President, in cooperation with the government, proposes a one-time PLN 500 per child
allowance. These would be distributed by the Social Insurance Institution (ZUS), and could
only be used for holiday purposes in Poland. President Duda expressed his hope that the
Sejm would adopt this new scheme before this year’s summer vacation season.ROMANIA
(prepared by CEC's Romanian partner - Serban & Musneci Associates)
Status of epidemic
• 21,182 confirmed cases; deceased 1360 (as of 11 June)
Key economic indicators
• As of June 11: the total number of suspended contracts: 237,760 – manufacturing industry:
37,580; hotels & restaurants: 50,279; retail: 34,102.
Key issues:
• On June 11, Prime Minister Ludovic Orban confirmed that the decision on extending the state
of emergency (expiring on June 15) would be announced next week. The issue of extending
the state of emergency has been deeply politicized over the past week. While President Klaus
Iohannis is in favour of a one-month extension, the parliamentary majority (PSD, ALDE, Pro
Romania) openly opposed this proposal, warning that they will vote against it. PM Orban
announced that, regardless of the successful extension, more restrictions would be lifted after
June 15.
• On 11 June the Government approved a resolution issued by the National Committee for
Emergency Situations which provided new rules for social conduct after June 15. The main
measure is that persons entering Romania will no longer be quarantined/under self-isolation.
At the same time, air traffic between Romania and countries with a low infection rate (to be
decided based on a methodology provided by the National Institute for Public Health – INSP)
will be resumed. Shopping malls are reopening after June 15, but their food courts and
cinemas remain closed. The maximum number of persons that can attend outdoor events
(sports) increased from 3 to 6, and outdoor pools are reopened.
• A bill initiated by PSD President Marcel Ciolacu, ALDE President Calin Popescu Tariceanu
and PNL deputy leader Florin Roman was tabled in parliament on Thursday. The draft
stipulates that the mandate of local elected officials will be extended until 1 November 2020.
Thus, local elections can be held in October at the latest.
• Prime Minister Ludovic Orban said on Wednesday that over the next 10 years Romania will
invest more than EUR 40 billion in transport infrastructure and EUR 25 billion in energy.
• Prime Minister Ludovic Orban has stated on Thursday that his goal is for Romania to exceed,
in maximum five years, the average value of the Gross Domestic Product (GDP) per capita
at European level, and to launch most of the projects needed for economic development in
the next two years.
• The government will approve the piece of legislation providing the credit guarantee scheme
for large companies to become operational after the European Commission gives its consent
in this respect, most likely in the next one or two weeks".
• Prime Minister Ludovic Orban stated that the Government has in view reaching the objectives
necessary for Romania to fulfil the accession criteria for the Eurozone, giving as an example,
amongst others, the reduction of inflation. On Wednesday, the European Commission made
public the convergence report for 2020, in which it shows that Romania presently fulfils none
of the four economic criteria necessary for adopting the euro.SLOVAKIA
(prepared by the CEC Government Relations office in Bratislava)
Status of epidemic (as of 11 June):
• 1,541 confirmed cases, 28 deceased (as of 11 June)
Key economic indicators:
• National Bank of Slovakia (NBS) expects the Slovak economy to contract by 10.3% this year;
next year, it expects economic growth of 8.4% and in 2022 4.5%
• According to the Statistical Office, Slovakia's real GDP fell by 3.7% y-o-y in the first quarter;
the unemployment rate reached 6%, up 0.2 percentage points y-o-y.
Key issues:
• The mandatory two-week quarantine in state facilities, as well as smart quarantine, are lifted
as of 10 June for 19 countries that the expert team deems safe. In addition to Czechia, Austria
and Hungary, the list was extended with Germany, Liechtenstein, Switzerland, Slovenia,
Croatia, Bulgaria, Greece, Cyprus, Malta, Estonia, Latvia, Lithuania, Denmark, Norway,
Finland and Iceland. Limit of 10 square meters per customer and two-meter distance between
customers will no longer be mandatory. Kids corners in shopping malls and nightclubs are
also allowed to open, but shops remain closed on Sundays. Face masks remain mandatory
indoors, but in the case of a closed team at the workplace, if people keep a two-meter
distance, they will only be recommended. In shops or public transport, the obligation to wear
a face mask remains in place. Further measures will be announced again after two weeks.
• The state of emergency declared in March ends on 13 June. The end means lifting of the
imposition of work duty for providers of healthcare, lifting of the ban on the exercise of the
right to strike in certain professions, and also lifting of the ban on the exercise of the right to
peaceful assembly. However, the declared extraordinary situation continues.
• Regular and irregular flights between Slovakia and 19 selected countries can resume again.
At the same time, the Ministry of Transport extended the ban on flights from other countries
to Slovakia until 24 October. In addition, international rail and bus transport operators started
to renew their connections to neighbouring countries gradually.
• Parliament approved state assistance for rental payments of owners of shops or restaurants,
who had to shut down their operations or reduce their activities due to the current coronavirus
crisis. The state estimates that the approved assistance will cost €200 million and there will
be 70-100 thousand applications. The subsidy will be the same as the discount percentage
offered by the landlord – max. up to 50%. The tenant can also pay the rent in 48 monthly
instalments.
• Following the COVID-19 crisis, the Labour Ministry is currently discussing the details of the
so-called kurzarbeit scheme with companies and trade unions. The Slovak version is likely
to become an insurance system financed by both companies and employees with a sum of
€2 billion to be collected in around 10 years. This money should then be used as a bailout in
case of another crisis. It is yet unclear whether it will be paid as part of the existing
employment insurance or if social contributions will be increased. The first proposals suggest
that 1% of the salary could be paid for kurzarbeit, with 0.5% paid by the employer and 0.5%
by the employee.You can also read
