Regional Update

CEE Covid-19 & Political Overview

31 MARCH – 28 APRIL 2021

Table of Contents

CROATIA ...... 3 CZECHIA ...... 5 HUNGARY ...... 8 POLAND ...... 10 ROMANIA ...... 13 SLOVAKIA ...... 16

CROATIA (prepared by CEC's Croatian partner - Vlahovic Group) COVID-19:

• Croatia is ranked the fourth out of 30 EU/EEA countries regarding the COVID-19 active cases per 100,000, but there have been no substantial changes to COVID measures in place. The strategy is to take measures regarding local hotspots rather than at the national level. PM Plenkovic expects that 55% of the adult population should be vaccinated before the end of June. Croatia and 12 other EU Member States have reached an agreement on the criteria for issuing the COVID „Green Passport“ that will facilitate the flow of tourists during the pandemic. The list of criteria has been submitted to the European Commission for approval. The government established a working group to develop a technical solution for cross-border interoperable digital green certificates. The Minister of Tourism announced that the government would cover part of the cost of the antigen test for foreign tourists who return to their countries after the end of their vacation in Croatia. Vaccination of almost 80,000 employees in the hospitality sector is has started. The Minister of Health is under fire over vaccination failures, especially related to the online vaccination registry.

Business and economy:

• The consolidated public debt in 2020 reached 88.7% of GDP, from 72.8% in 2019. In the same period, investments rose by 19.2%. Employment in March saw a 1.5% drop compared to March 2020. The Croatian National Bank revised its economic growth projection for 2021 from 4.9% to 5.9%, while the IMF lowered its estimate to 4.7%. • PM Plenkovic announced that the government is extending the job preservation measures in May, emphasizing that many Croatian companies work normally, which is evident from tax revenues and several other indicators. • The tender submission deadline for granting a Concession for the development and economic use of the container terminal in the Port of Rijeka is extended until 10 May. The concession will be issued for a 50-year-period. A previous tender advertised in December, for which two bids were received, was cancelled. While one bid came from the Chinese Ningbo Zhoushan Port Company Limited, Tianjin Port Overseas Holding Limited and China Road and Bridge Corporation, the other was submitted by the Dutch APM Terminal BV in cooperation with the Enna Logic company from Croatia. • Bids for currently one of the most significant infrastructure projects in Croatia have been opened. Estimated costs for the reconstruction of the existing and construction of the second railway track on the section Hrvatski Leskovac – Karlovac on the Zagreb-Rijeka corridor amounted to almost EUR 270 million. Fifteen bids were received, ranging from EUR 173 million to EUR 386 million. The most favourable offer was submitted by a Chinese consortium led by China Railway Eryuan Engineering Group, and the largest number of tenders were submitted by companies and consortia from Turkey, five out of the total number. A contract shall be awarded on the sole basis of the award criterion for the most economically advantageous tender.

Politics and legislation:

• The National Recovery and Resilience Plan was presented before the Parliament and the opposition slammed it. The Croatian Employers’ Association and the Croatian Chambers of Commerce who were not involved in preparing the Plan, claim they are not satisfied with the Plan since too much emphasis is placed on public sector projects. Finance Minister Maric said the Plan is a generational opportunity for Croatia and announced that the government would enact the document on Thursday and send it to the European Commission for final approval and evaluation by the end of the week. • The government and representatives of drug wholesalers had reached an agreement on a debt settlement scheme; the Finance Minister urged the Health Minister to comprehensive reform efforts in preventing any further accumulation of liabilities.

CZECHIA (prepared by the CEC Government Relations office in Prague)

Diplomatic Crisis in Czech-Russian Relations:

• The announcement that Russian intelligence agents caused the deadly 2014 explosion in an ammunition warehouse in Vrbetice has dramatically shaken Czech-Russian relations and became a top story of the end of April. The findings of an investigation of the Czech intelligence agency (BIS) show that two Russian agents from GRU secret service behind the Czech explosion were also responsible for poisoning Sergei Skripal in 2018 (more in our Special Report). According to the latest findings brought by Bellingcat and Czech weekly Respekt, at least six operatives including a Senior Deputy of GRU were involved in the Czech depot explosion and other secret operations in the CEE region. • On April 22, new Minister of Foreign Affairs Jakub Kulhanek (CSSD) announced that effective June 1, 2021, the number of Russian diplomats in Prague’s embassy will be based on strict parity with the numbers of Czech diplomats based in Moscow. This bold move came after Russia declined the Czech request to reinstate all of the diplomats expelled on April 18. After his controversial comments softening the seriousness of the scandal (labeling it as an “attack on goods”), PM Andrej Babis stated that the massive explosion that killed two Czech citizens was in fact, an act of state terrorism. He also added that the government will be seeking financial compensation from Russia for damages from the explosion. Minister Kulhanek expressed his willingness to continue with the negotiations in order to stabilize and restore Czech-Russian relations in a diplomatic manner. President Zeman commented on the issue with a week-long delay. In an interview on April 25, he relativised Russian involvement in the case, saying that there is a second scenario, which indicates the explosion was caused by bad handling of the munitions. The president’s long-anticipated address stirred strong criticism among experts, opposition politicians and even high ranking constitutional officials.

COVID-19:

• 51 739 active cases, 1 541 963 recovered, 29 075 deceased (as of April 27) • Petr Arenberger has become Czechia’s fourth Minister of Health since the outbreak of the pandemic, replacing Jan Blatny who was dismissed on April 7. Arenberger is a doctor and professor by trade, specializing in dermatology and venereology. From October 2019, he served as the director of the Vinohrady faculty hospital in Prague, a role which he was appointed to by then Minister of Health Adam Vojtech. • The pandemic situation in Czechia continues to improve and Covid-related hospitalizations are declining, currently at 3 693, of which roughly 850 are in serious condition, according to the latest data from the Ministry of Health. • The Ministry of Health issued a new travel regulation effective April 5, according to which it will be necessary to undergo a Covid-19 test before entering Czechia only when returning from countries with a very high risk of infection (i.e. those that fall into the "dark red" category, ie. all countries not listed at a lower risk level, e.g. France, United Kingdom or Italy). People

returning from medium or high-risk countries, newly from Germany or Slovakia for example, do not have to undergo a test prior to their return unless they travelled by public transport. • With the recent improvements, the Ministry of Health has unveiled a six-phase reopening plan (or exit strategy) for the upcoming months. The first phase already began on April 12, with travel between districts resuming, curfew lifting, and certain primary schools and business establishments such as office supply stores, zoos, outdoor botanical gardens and farmers’ markets reopening. According to the Ministry’s plan, the six phases will take place as follows: o April 12 - as mentioned above o April 26 - focused on a further reopening of schools including practical teaching in secondary schools and senior years of university, as well as the rest of kindergarten grades in selected regions: Karlovy Vary, Hradec Kralove, Plzen region o May 3 - remaining stores (nationwide) with a limit on the number of people according to the size of the store, hairdressers, spas and gallery, as well as a second level of elementary schools, rotationally based on regional incidence o Likely mid-May pending the number of infected is less than 100 per 100 thousand (daily reported cases should be somewhere around 1 500) o Likely end of May pending the number of infected is less than 75 per 100 thousand; this phase should include outdoor restaurants, indoor hotels, and sports centres o Likely mid-June pending the number of infected is less than 50 per 100 thousand; to include indoor restaurants, theatres, and cinemas with a negative Covid-19 test • In mid-April, the Supreme Administrative Court (NNS) annulled the current extraordinary measure of the Ministry of Health, which, among other things, restricts the operation of shops, services and gathering of people. The ruling will enter into force on the fourth day after the court decision has become final, i.e after its delivery to the relevant parties. Minister of Health Petr Arenberger (for ANO) has already announced that the Ministry will issue a new version of the measure - in the event that he does not, the entire measure and exit strategy will be annulled. Even though the court annulled the measure due to procedural errors, it also criticized its contents, namely limitations of gatherings among families, during demonstrations, outdoor gatherings or church services. • When it comes to Czechia’s vaccination progress, the country has so far administered over 2 640 000 doses overall, of which just over 900 000 include the second dose, but the daily number of vaccinations administered has declined in recent days. According to PM Babis’ latest statement, all those who wish to receive a Covid-19 vaccine in Czechia should be able to do so by the end of August at the latest. With the incoming increase in supply, almost half of the population (5.6 million people) should receive a vaccine by the end of June. Babis also said the Government was preparing a vaccination strategy for the next two years. Even though the supply of vaccines for practitioners is generally still low, the delivery of the delayed Johnson & Johnson vaccines within a month should improve the situation.

Business and economy:

• According to the latest statistics published by the Czech Statistical Office (CZSO) on April 1, the unemployment rate in Czechia for February reached 3.3% - 1.8 higher than the year before. The economic activity rate of the working population (aged 15-64) reached 76.7% - an increase of 0.2% compared to February 2020. • According to a recent survey of 607 employers conducted by Manpower, Czech employers plan to hire more than lay off in Q2 of this year. A total of 13% of employers expect an increase

in the number of employees, 5% predict a decrease. A total of 79% of companies contacted said they were not planning a change during Q2. The net labour market index is +8%, compared to -1% in the previous quarter. • At the end of March, the Czech National Bank (CNB)’s Board unanimously voted to keep its key interest rate unchanged. The two-week repo rate remains at 0.25%, the discount rate at 0.05% and the Lombard rate at 1%t. CNB also published its 2020 financial statements in late March, recording a profit of CZK 91.7 billion (EUR 3.75 billion) in 2020, which will be used to cover part of the accounting loss of previous years. The rest of the CNB's accumulated loss is reported to be CZK 37.5 billion (EUR 1.45 billion).

Politics and legislation:

• After the change at the Ministry of Health, the Minister of Foreign Affairs has been swapped as well. Hitherto Minister Tomas Petricek was dismissed in mid-April and Social Democrats chose Jakub Kulhanek as the new Minister of Foreign Affairs. Kulhanek is an expert on international relations and security and, importantly, is seen as a close ally of Hamacek. Prior to assuming the office, he served as Hamacek’s deputy at the Ministry of Interior. He had also previously served as deputy Minister of Foreign Affairs and Deputy Minister of Defence. This pick has been criticized by opposition leaders, as they do not see Kulhanek as strong enough of a personality notably amid the current crisis with Russia. • The Communist Party terminated its tolerance of the minority Government of ANO Movement and Social Democrats. According to the party’s chairman Vojtech Filip, the ANO Movement has lost the party’s trust as it had not supported Communists’ legislative proposals and failed to keep the original agreement on tolerance, though the Communist Party still supports the Government in regular voting of the Chamber of Deputies. • According to the latest Kantar poll for Czech Television, the coalition of Pirates and Mayors remains the frontrunner with 30% of the votes, despite a slight decrease in support in comparison to the previous poll. PM Babis’ ANO Movement remains in second place with 23.5% of the votes, followed by SPOLU coalition (ODS, KDU-CSL and TOP09) with 19%. Far-right SPD would receive 12%, followed by Communists, who, with 5% of the vote, might struggle to enter the Parliament. As indicated by previous polls, junior coalition partner Social Democrats would fail to reach the necessary threshold with only 3%.

HUNGARY (prepared by the CEC Government Relations office in Budapest) COVID-19:

• 3,603,901 people have so far been vaccinated against COVID-19 in Hungary, about 37% of the population. With 1,936 new confirmed cases of COVID-19 in Hungary, the number of total cases now stands at 771,454. Meanwhile, 183 Hungarians succumbed to the virus on Monday.

Business and economy:

• IMF: this year’s growth of the Hungarian economy may be higher than expected: In its latest study “World Economic Outlook, 2021 April”, the International Monetary Fund (IMF) raised its forecast for GDP growth in Hungary this year to 4.3%, and 5.9% in 2022. Their latest forecast in October projected a modest economic growth of 3.9%. The detailed analysis also shows that the average annual inflation in Hungary may rise to 3.6% this year from 3.3% last year, but will decrease to 3.5% next year. The expected rate of increase in consumer prices for this year has been raised by 0.2 percentage points from an estimated 3.4% forecast in October. IMF analysts anticipate a smaller-than-expected deficit in the current account. According to the recent forecast, the current account deficit is set to widen from 0.2% to 0.4% of GDP this year, which is lower than the 0.9% deficit estimated in October. Next year's deficit was estimated at 0.3%. According to IMF calculations, after last year’s 4.1%, the unemployment rate could be 3.8% this year, which is well below the 4.7% expected in October 2021. Next year, the unemployment rate in Hungary could fall to 3.5%.

Politics and legislation:

• Pandemic restrictions have been eased: Minister of the Prime Minister’s Office Gergely Gulyás reported on the government’s latest decisions. Since the number of people vaccinated in Hungary has reached 3.5 million, terraces of bars and restaurants can reopen and stay open until 9:30 pm. Customers only have to wear masks if they enter the indoor space of the restaurant, but masks are mandatory for staff, even outdoors. Together with this, starting on 24 April, the night-time curfew starts at 11 pm. Once 4 million people are inoculated, further steps will come in the reopening process. Once the country reaches the target, theatres, circuses, cinemas, gyms, swimming pools, baths, libraries, sports events, indoor areas of hotels and restaurants will open to the public, however, only to those disposing of an immunity certificate (vaccinated or identified with coronavirus). Hungary is expected to reach the milestone of 4 million vaccinated people around Wednesday or Thursday this week. The available epidemic data show the third wave of the COVID-19 pandemic plateaued on 13 April. Since then, the number of active cases has been steadily declining, followed by the number of people hospitalised and the number of those who are on ventilators. The number of people vaccinated may reach 4 million this week, which means that many services can be restarted. • Government exceeds climate expectations of EU Recovery Plan: The government published its indicative programme of the EU recovery fund, in the value of nearly HUF 5,900 billion. Exceeding the mandatory minimum of 37%, the cabinet plans to use 51% of the fund (HUF 2,956 billion) on measures related to climate protection goals. The document includes

nine development components. The largest amount would be dedicated to sustainable, green transport, followed by developments in healthcare and the renewal of universities. The cabinet plans to use 100% green solutions for water management, energy and the transition to a circular economy. The plan contains 68 investments and reforms. Annually, in 2021 HUF 761.2 billion; in 2022 HUF 1313.1 billion; in 2023 HUF 118.7 billion; in 2024 HUF 1072.6 billion; in 2025 HUF 854.4 billion; and in 2026 HUF 483.1 billion would be invested. The government calculates that as a result, gross HUF 5074.9 billion added value will be created between 2021 and 2026. In the short term, the economy will see a labour demand in the volume of 395.4 thousand. The mid- and long-term effects can result in the creation of 32.4 thousand and 85.8 thousand jobs, respectively. At the EU summit held this weekend, Prime Minister Orbán and European Commission President Ursula von der Leyen also discussed the recovery fund, which the Hungarian government will present shortly. Orbán has made it clear that Hungary will submit its own relaunch plan only to the non-refundable part of the fund. • 2021 budget to be modified due to pandemic; 2022 budget to be tabled soon: It has been known for a while that the 2021 budget must be modified due to the pandemic measures. Minister of the Prime Minister’s Office Gergely Gulyás said a fund equalling 12% of Hungary’s GDP, or HUF 6,000 billion, will be established within this year’s budget. The goal is to provide additional resources for the economy once the pandemic has eased and the country has achieved herd immunity. A fund of about HUF 7,000 billion or 14% of the GDP will be allocated in the 2022 budget to restart the economy. Gulyás believes these resources will ensure economic growth. The budget deficit will be set at 7.5% in the new budget. The year-end state debt may decrease to 79.9% in 2021. Gulyás said that in March 2021, the number of employed was 66,000 higher than a month earlier. Only 10,000 more jobs need to be created to meet the government’s pledge to restore all jobs lost to the pandemic.

POLAND (prepared by the CEC Government Relations office in Warsaw) COVID-19: Follow this link for an overview of current COVID-19 restrictions in Poland.

• On 28 April, the government announced its plan for coming out of lockdown. As of 4 May shopping centres, cultural and religious intuitions will re-open. Also, primary classes 1-3 will return to schools. From 8 May hotels will be allowed to accept all guests, and from 15 May restaurants will be able to open their outdoor terraces and gardens, and the obligation to wear a mask outdoors will be lifted. From 29 May restaurants will be able to take guests indoors and children will return to schools. All businesses will still be subject to sanitary measures specified by the government. • The government announced changes to the Polish Vaccination Programme. From 26 April, the government has opened the system to persons born in 1974. On average, over the ten following days, two consecutive age groups daily will be able to start making appointments. By 9 May, the youngest adults born in 2000-2003 will become eligible for a vaccination. Ultimately, by 10 May, all adult citizens in Poland will be eligible to schedule their vaccination appointment. • The government has also published a regulation aimed at reducing the risk of vaccines being wasted. Excess doses that may go unused can be given to any person over the age of 18. • The government is also working on the introduction of a workplace vaccination scheme, which would allow businesses to organise vaccinations for their employees. The programme will likely launch in May.

Business and economy:

• The much-anticipated presentation of the "New Deal" has been postponed several times. Meanwhile, the Dziennik Gazeta Prawna daily reports that this extensive policy package will also include a set of far-reaching tax reforms. According to these revelations, PiS plans to revisit some of the solutions already presented in the past. The presentation of the "New Deal" is scheduled for 8 May. The drafted tax legislation is supposed to be based on three pillars. o Elimination or significant reduction of the Personal Income Tax (PIT) deduction for health contributions; o An increase in the tax-free threshold to PLN 30 000, from the current PLN 8 000; o An increase in the second tax threshold from PLN 85 000 to PLN 120 000. • Eurostat data for February indicates that Poland has the lowest unemployment rate in the European Union, at 3.1%. Similar results were achieved in past months, with Poland's oscillating at the end of the EU unemployment table. The EU average is put at 7.5%. It has been true for a few years now that Poland's main problem in terms of labour is not large segments of unemployed, but rather supplying skilled labour in a dynamically growing economy. Prime Minister Mateusz Morawiecki recently reiterated that one of the imperatives of post-COVID recovery would be attracting workers from abroad, especially Poland's eastern neighbours. • Despite the COVID-19 pandemic, leading agencies have maintained Poland's credit ratings. S&P Global confirmed Poland's A- long and short-term foreign currency sovereign credit ratings, with a stable outlook. Fitch also maintained Poland at A- and stable. The agencies cited

good macroeconomic indicators, a diversified economy, EU membership and a sound economic policy framework. Some highlighted that Poland is relatively resilient to crises. In the past year, commentators have argued that since Poland went through the 2008 financial crisis relatively untouched, it will do the same during the pandemic. Still, in 2020 Poland has experienced its first recession in 30 years, with the economy shrinking by 2.8%. • At the beginning of April, PMM Morawiecki Morawiecki and Deputy PM Jarosław Gowin presented the scheme for extending the scope and timeframe of current COVID-19 support for businesses. The Polish Development Fund’s (PFR) Financial Shield and the Sectoral Shield will be extended for Q2. In total, the new aid will put another 30 billion PLN into the economy. Additionally, 16 new business types were added to the Shields' registries (by PKD code), putting the number of supported business types at 60. The financial aid will include: o Exemptions from social security contributions; § For small companies with fewer than 49 employees; o Downtime payment; § In the amount of PLN 2,080; o Non-returnable subsidy of 5000 PLN; o Co-financing of employee workplaces; § In the amount of PLN 2,080 for a period of 3 months. o Temporary reduction of rent by 80% when business bans apply to commercial facilities greater than 2000 m2; o A 50% reduction over a three-month period after the end of the ban; o Landlords can set a higher rent if the scale of the reduction is unequal to the tenant's actual damage.

Politics and legislation:

• The ruling camp has reached an agreement with the Left opposition party on a key policy issue. The government has agreed to amend the National Recovery Plan to include the Left's key postulates. In return, although this has not been explicitly underlined, the Left will support the ratification of the Own Resources Decision in parliament. The ruling PiS party needed the opposition's support as its junior coalition partner, Solidary Poland of Zbigniew Ziobro, vouched to vote against the ratification. Now, the Left's support has paved the way for the deployment of EU funds. Government representatives are highlighting that Poland will receive a record amount of PLN 770 billion in funding. The move, however, has driven a deep wedge between opposition parties – especially the Civic Platform and the Left. Now the public's focus will turn from conflicts within the ruling camp to those among the opposition. • Following nearly three months of a deep internal crisis in the ruling United Right coalition, it seems a shaky consensus was hammered out. The coalition leaders – PiS' Jarosław Kaczyński, Agreement’s Jarosław Gowin, and Solidary Poland’s Zbigniew Ziobro – held talks on 25 April. The talks have reportedly cleared the way for the government to adopt the National Recovery Plan and the Own Resources Decision (ORD). Still, disagreements remain between PiS and its junior partners. In general, the coalition's format has run its course; the United Right is not likely to approach the next general election in the same shape. • On 17 April, the Agreement party (Porozumienie) of Deputy Prime Minister Jarosław Gowin held a party congress on Saturday. Porozumienie is the junior coalition partner of the ruling Law and Justice party (PiS), but it is conflicted with its senior partner since early February. The convention was meant to highlight that Gowin is carving out the potential for political

11 independence. Many scenarios are now on the table, as Gowin weighs his options. The convention alluded to Agreement’s potential future cooperation with the opposition but did not clearly break ties with PiS. Gowin’s Agreement party still remains in the shaky United Right ruling coalition.

ROMANIA (prepared by CEC's Romanian partner - Serban & Musneci Associates) COVID-19:

• The number of Daily covid cases drops to an average of 2000 while vaccination numbers are increasing steadily. • The PM insists on a target of 5 mln people vaccinated by June: The target of having 5 million people vaccinated by June 1 is "realistic," and the Government has made every effort to provide the infrastructure needed to reach it, prime minister Florin Cîțu said. At the end of April, more than 3 million people already received at least one dose of a Covid-19 vaccine since the start of the country's vaccination campaign on December 27, 2020. A decision about dropping the requirement to wear a mask in all public venues will be taken once 60-70% of the country's population is vaccinated, the PM said. Citu also plans that after June 1, some COVID- 19 relaxation measures could be discussed, pointing to the fact that restaurants could be opened at a capacity of 30-40% regardless of the cumulative two-week caseload rate.

Business and economy:

• EC rejects another section of Romania’s PNRR: the gas network expansion: The European Commission (EC) does not agree to finance the EUR 600 million project proposed by Romania for connecting hundreds of localities to the natural gas networks under the National Recovery and Resilience Plan (PNRR), announced the president of the ruling Liberal Party (PNL), Ludovic Orban. "Nothing was rejected since nothing was sent in the first place," the reformist (USR PLUS) minister of investments and European Funds Cristian Ghinea, the main responsible for Romania's PNRR, commented, playing down the disagreements with the Commission. "It is a negotiation," he added. It is the second major project rejected by the Commission, after the EUR 3 billion project to restore the irrigation system. The project was called "Development of natural gas infrastructure mixed with hydrogen and other green gases." "Maybe a better technical substantiation was needed," said PNL leader Orban. The Ministry of Energy, supposedly the author of the project, is under the management of the Liberal party - and the junior ruling partner USR-PLUS used the opportunity to point out this. Cristina Pruna, USR deputy president and Chamber of Deputies' deputy speaker, blamed energy minister Virgil Popescu (PNL) for the project rejected by the Commission. She recommended more revolutionary energy sources/technologies such as "hydrogen, carbon sequestration, biofuels, green energy, charging stations for electric vehicles, energy efficiency, digitalization of the system, encouragement of prosumers, battery production." • Transport Minister, EC Vice President and Transport Commissioner address motorway segments' funding through PNRR: The Minister of Transport and Infrastructure, Catalin Drula, discussed with the Executive Vice-President of the European Commission, Margrethe Vestager, and the European Commissioner for Transport, Adina Valean, on Monday, the financing of five segments of the motorway through the National Recovery and Resilience Plan (PNRR). The Minister of Transport stressed that he looks with confidence towards the completion of the negotiations between Romania and the European Commission on the PNRR. • Balance of non-government credit, up 1,8% in March: The balance of non-government credit granted by credit institutions increased in March 2021 by 1.8% compared to February

2021 (1.4% in real terms), to the level of 290.569 billion lei, according to the data of the National Bank of Romania (BNR) at the end of April. • Moody’s sees more reasons to maintain Romania’s negative sovereign outlook: The latest credit opinion carried out by Moody's on April 20, 2021, before the update on Romania's rating, scheduled for April 23, indicates a slight deterioration in the sovereign credit risk. Even if the report does not rule out the possibility of changing the outlook from negative to stable, the risks listed by the credit rating agency are greater than the positive factors. • Fitch maintains a negative outlook on Romania’s BBB- sovereign rating: International rating agency Fitch on April 23 has affirmed Romania's long-term forex debt rating (IDR) at BBB- with a negative outlook, in line with the expectations. Fitch analysts cited "uncertainty regarding the implementation of policies to address structural fiscal imbalances over the medium term and the impact from the coronavirus pandemic on Romania's public finances." Fitch's decision came just days after peer agency S&P surprisingly improved its outlook on Romania's BBB- rating from negative to stable. • Net assets of investment funds, up 2,2 in March: The net assets of the local open-end investment funds registered an increase of 2.2% in March compared to the previous month, standing at a value of approximately 21.13 billion lei, according to a report of the Financial Supervisory Authority (ASF). • OMV Petrom will lead offshore Neptun Deep operations if Romgaz replaces ExxonMobil: OMV Petrom (SNP), the largest energy company in South-Eastern Europe, will take over the operational management of the Neptun Deep offshore gas project in Romania's Black Sea if state-owned gas producer Romgaz takes over ExxonMobil's stake in the project. So far, US group ExxonMobil has been managing the Neptun Deep project, where it is an equal partner (50-50) with OMV Petrom. Romgaz, which is strongly backed by Romania's Government, has submitted the only bid for ExxonMobil's stake in the project

Politics and legislation:

• Deputy military attaché of the Russian Embassy in Bucharest declared persona non grata in Romania: The Romanian Foreign Ministry has announced that the Romanian authorities had decided to declare deputy military attaché of the Russian Embassy in Bucharest, Alexey Grishaev as persona non grata in Romania, arguing his actions and activities “are contrary to the provisions of the 1961 Vienna Convention on diplomatic relation”. The Romanian MFA says that the Russian side had been informed about that today, April 26 after Romanian FM Bogdan Aurescu had summoned the Russian Ambassador to Romania, Valery Kuzmin to the ministry’s HQs. On Friday, Russian ambassador Valery Kuzmin posted a stance on the recent developments in Ukraine and on Romania, saying, among others, that Romania should be “concerned” if it got involved in “a military adventure” next to NATO. Any threat to Romania is in fact a threat to NATO, the Minister of Foreign Affairs, Bogdan Aurescu said on Sunday (April 25), adding that the recent announcement by the Russian Federation on withdrawal of its troops from around Ukraine also shows that heavy defence equipment remains on the ground and could be used "in a second or more iteration of this event," Romania's Foreign Minister Bogdan Aurescu said on Sunday. • Ruling Coalition signs a new collaboration protocol at the end of April putting an end to the internal crisis caused by PM Citu (PNL) firing the Minister of Health Vlad Voiculescu (USR-PLUS). The updated version of the ruling coalition's protocol, the document that put an

14 end to a week of political turmoil in Romania in the evening of April 20, brings nothing new - but it smoothens the cooperation, prime minister Florin Citu commented. "It's a political document. The amendment of the Constitution was not discussed," he said, hinting that he is still entitled to dismiss whatever minister he finds not appropriate for his/her seat, irrespective of the political affiliation and the position of his/her party. PM Citu stressed that the document was signed by the ruling party's head - the president of the National Liberal Party (PNL) Ludovic Orban - and not by the prime minister himself, a note also aimed at playing down the importance of the amendments in the cooperation protocol.

SLOVAKIA (prepared by the CEC Government Relations office in Bratislava) COVID-19:

• 8,285 conducted PCR tests (488 positive); 1,402 hospitalized; 41 deceased; 19,800 inoculated (1,472,220 vaccines used in total) (daily update). • With the vaccination process progressing (more than 1 million people – around 20% of the population – got at least the first jab), the epidemiological situation is rapidly improving with decreasing numbers of both newly infected and hospitalized people. • Therefore, the government decided to lift some of the anti-pandemics restrictions as of 19 April. • Non-essential shops and services reopened as of 19 April together with hotels and guesthouses, museums, galleries, libraries, zoos and botanical gardens. As of 26 April, restaurant terraces and fitness centres can also reopen under some limitations related mostly to the number of visitors and a negative coronavirus test result. Details for the operation of various establishments are defined in the respective decree of the Chief Public Health Officer. • Nevertheless, the government extended the state of emergency again until 28 May to keep the curfew rules restricting the movement in place, although the restriction period was shortened from 8pm-5am to 9pm-5am. • Home office is no longer mandatory and employees will be able to continue to work from home only according to the instructions of their employer. • Face masks are no longer mandatory outdoors if the distance from others is more than 5 meters; face masks instead of respirators at the workplace can be used in case of employees with breathing or skin problems or due to working conditions at the consent of the employer. • Exemptions from negative test apply to those that have overcome COVID-19 in the previous 180 days or 14 days after receiving the second jab of Pfizer / Moderna vaccine or 4 weeks after receiving the first jab of AstraZeneca / Janssen vaccine. • Upon return from EU-countries (+ Iceland, Norway, Liechtenstein, Switzerland and UK), inoculated persons (14 days after the second jab of mRNA vaccine and 4 weeks after the first jab of vector vaccine) or those that have overcome COVID-19 in the past 180 days can undergo RT-PCR test immediately and not after eight days. • However, in this case, registration (http://korona.gov.sk/ehranica) and a negative antigen test (not older than 48 hours) or RT-PCR test (not older than 72 hours) upon entry to Slovakia is still a pre-condition. • All persons coming to Slovakia who have been in a non-EU country in the preceding 14 days (except Iceland, Norway, UK, Lichtenstein and Switzerland) register at korona.gov/ehranica and self-isolate until the negative RT-PCR test is taken – the test might be taken at the 8th day of self-isolation.

Business and economy:

• The National Bank of Slovakia expects the Slovak economy to grow by about 5% this year. • The registered unemployment rate in March in Slovakia increased by 0.08 percentage points m-o-m to 7.98%. • The general government deficit in Slovakia reached 6.16% of GDP in 2020.

Politics and legislation:

• As of 21 April, entrepreneurs in the HORECA and tourism sector can apply for compensation for loss of income from 1 November 2020 to 31 March 2021. They can thus apply for assistance for the entire period of the pandemic in the "de minimis" scheme, i.e. up to €200,000. A basic condition for obtaining state aid is a drop in sales by at least 40% compared to the same period in 2019. It is evaluated each month separately and the amount of aid will be based on the calculated loss. • Parliament adopted legislative changes to enable the Ministry of Transport to create aid schemes for road transport operators affected by the coronavirus pandemic. The scheme will be divided into two parts. While one will deal with public transport companies under the jurisdiction of local self-governments and counties, the other will include assistance from the Transport Ministry for bus transport, freight road transport, taxi services, driving schools, and training centres. Operators in non-scheduled bus transport will be compensated in the spirit of the existing aid scheme under the remit of the Economy Ministry. • The government adopted postponing the payment of social levies paid by employers and self- employed for the month of April to 30 June 2021. The postponement applies also to pension savings contributions paid by the employer for employees doing high-risk work (category III and IV). The condition is the drop of revenues by more than 40%. • The government adopted a decree on the execution of measures of economic mobilization related to a state of emergency. Contract for production of the necessary medicines or medical aids with entities of economic mobilization will be concluded by the Ministry of Economy. In case of securing medicine or medical supplies to healthcare facilities, contracts will be concluded with the Ministry of Health.

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