Romania’s Fiscal Instability, Main Challenge for Businesses in 2019

Romania made over 800 changes in its tax legislation in 2018, culminating with a surprise “greed tax” on bank assets adopted on the fast track in late December. According to the ninth edition of the KeysFin half-year economic outlook barometer, 82% of business managers polled said fiscal unpredictability is the main challenge for businesses in 2019.

Uncertainty over the fiscal outlook grew by 6 points compared with the previous barometer, a sign that taxation issues have since worsened.

If last year, the second biggest concern was inflation, this year it’s a drop in investments, as 64% of managers polled expect investments to drop on a worsening macroeconomic outlook.

“2019 will be a year of standby for many investors. The lack of predictability in administrative decisions, the evolution of the currency, constraints in financing and a deepening workforce shortage will significantly influence investor appetite,” the study found.

The poll found 57% of investors see higher lending costs among the main challenges this year, while 43% said the depreciation of the Romanian leu was a major concern, 27% were concerned about higher utility prices,, and 23% about the workforce shortage.