On January the 1st, 2014 Romania officially granted foreign citizens the right to directly purchase farmland.  Prior to this date, foreign citizens were allowed to buy farmland in Romania only after setting up a Romanian firm. Experts have warned that the purchase of farmland, by foreign citizens, will increase significantly and that the state should thoroughly control this type of transactions.In 14 years alone, 3 million hectares of farmland have been purchased in Romania, which means that a third of Romania’s fertile land is now owned by Italian, Danish, German, Norwegian, Dutch, Hungarian and Lebanese citizens.

Officially, companies running on foreign capital have already bought 1 million hectares of farmland, and have signed lease contracts for another 2 million hectares.According to Laurentiu Baciu, head of League of Romanian Farmers' Associations, foreigners cultivate land in Romania, taking advantage of the fertile land, the small price per hectare and the cheap labour force but sell the crops in the countries they come from. There, the wheat Romanian is processed in specialties or used for animal feed, then exported to Romania and sold to Romanian consumers for a prices bigger than the domestic ones.

Most foreign investors bought fertile farmland in the Calarasi, Ialomita and Banat regions. Italian investors have particularly invested a lot, purchasing some 250,000 hectares of land, most of which in Western Romania. High on demand are plots of land that are pooled together and highly productive. The hesitation of landowners and farmers in selling their small plots of land, inherited from their parents, makes farmland price report a constant upward trend. For instance, in Intorsura village in Dolj county, prices for arable plots of land have increased from 600 euros some years back to 1,500 euros in poor regions, or 2,000 or even 3,000 euros for  productive and abundant farmland.

Farmland in Moldova and northern Transylvania is cheap, but too scattered for an investor to be able to buy large tracts. Maybi for this reason, there are few agricultural operations near Salaj, while the biggest farmers there are foreign business people who bought large areas of land in the 1990s.

Starting April, farmland is to be sold under new regulations. Romanians must observe a new set of procedures in order to be allowed to sell their land. First they must notify the local town hall with respect to their intention to sell, while the sale cannot be completed any sooner than 30 days. The seller must specify a price, while the town hall will make the price public, informing co-owners, the family, landholders, neighbors and the entire village. They have priority rights to buy the land. Romania has some 14 million hectares of farmland at present, of which 10 million hectares in use.

After an increase a Romania’s GDP last year by 2.9% in real terms compared to 2013, one of the highest economic growth rates in the EU, the economic forecasts for this year in Romania indicate a growth of 2-3%. The government, for example, provides in its state budget for an economic growth rate of 2.5%, a cautious target which will nevertheless force a growth rate of more than 3%, depending on external factors, Cristian Socol, an advisor to the prime minister told Agerpres agency. In his opinion, the budget is again focused on investment and the creation of new jobs. “Expenditure dedicated to investment is by 24% higher than in 2014. The 2015 budget also encourages the private sector by increasing co-funding for the absorption of European funds, state guarantees and state aid schemes, more support for farmers, concrete facilities for foreign investments with added value, the development of industrial and technological parks and incentives for technical education”, said Socol.

The 2015 state budget provides for a deficit level of 1.83%, as agreed upon with the International Monetary Fund and the European Commission, and an average annual inflation rate of 2.2%. The market research company Business Monitor International estimates that the Romanian economy will grow by more than 3% this year and in 2016, based on the transition from export-based growth to growth generated by domestic demand. The National Forecast Committee expects an economic growth of 2.5% for this year. The figure is closer to the estimates of the European Commission and the International Monetary Fund of 2.4% and 2.5%, respectively, but below the growth rate of 3.2% predicted by the World Bank in June 2014.

Economic analyst Constantin Rudnitchi speaks about what happens in the private sector: “In the private sector things still do not work as well as we would like them to, or as the macroeconomic parameters indicate. In other words, this economic growth that we have been talking about a lot recently, does not necessarily transfer into the private economy. We are in a paradoxical situation, as figures indicate, there is a lot more stability in the budgetary sector and sometimes even the salary increases come from this sector, rather than from the private economy. This is a proof that the real economy is not yet working properly, that those macroeconomic increases do not translate in real data, that many economic sectors probably still experience difficulties, businesses are affected, they either fail to grow or they grow very slowly, and entrepreneurs are very careful about the salaries they pay to their employees. Although the industry as a whole accounts for roughly 30% of Romania’s GDP, there are only some industrial sectors with good performances, or even specific companies in those sectors, particularly exporting companies and those companies which have substantial sales on the domestic market, namely companies in the oil sector, natural gas sector, the energy sector in general.”

We should also note that Standard & Poor’s rating agency expects Romania’s GDP to grow by an average 2.7% in 2015 – 2017, while Fitch estimates a 3% annual growth rate for 2015 – 2016, as a result of resumed investments, among other factors.

For the whole of 2013, Romania’s GDP, meaning the total of goods and services in the overall economy, went up by 3.5% against 2012, according to the National Institute of Statistics.
Those are positive signals, which should also be sustained for this year and the next, as Prime Minister Victor Ponta put it. He claimed that this year Romania would save 2 billion Euros when taking out loans on financial markets. He also said that, starting on 1 July, there were plans to reduce social security contributions, but most likely the measure to be taken would be exempting reinvested profit from taxation:
“Things went well in 2013. It went well in terms of economic growth, deficit, European fund absorption, and of course, in 2014 we may continue to boost measures for social balancing, pensions, wages, and for the private industry. Rising exports and growing industrial output were very important. We are on the same growth trend. Of course we can afford to go ahead with such measures when things go well. We saw investments grow in 2013 as well, therefore exempting reinvested profit from taxation is a feasible objective.”

Professor Dan Armeanu from the University of Economic Studies of Bucharest says that unfortunately, the economic growth is not reflected in the pockets of the population:
“Right now things are good. We have a very good marcroeconomic stability, and here we can go into details: one of the highest economic growth rates in the EU, a small public debt, in the context of the European crisis, a low inflation rate, which is on account of the good agricultural year, an unemployment rate within reasonable limits, much lower than the EU average, and the lowest current account deficit of the last 20 years. In 2013, the good farming year saved the economic growth, and impacted inflation. Here we should add exports, because they developed a lot based on exports outside the Eurozone, and that would be very good for the future economic growth if it becomes permanent. The problem is that this economic growth, unfortunately, is not reflected in the pockets of the population.”

The European Commission anticipates a 2.3% growth rate in the Romanian economy for 2014.