Radio România Internațional

Tag: excessive deficit

  • The Week in Review (01 – 7.03.2020)

    The Week in Review (01 – 7.03.2020)

    The coronavirus in Romania



    New cases of coronavirus infection have been confirmed in Romania, tens of people are in institutionalized quarantine and around 12 thousand are in quarantine at their homes. The head of the Department for Emergency Situations Raed Arafat has pointed out that the decision to isolate an entire city is not made at local level but at national level, after a rigorous analysis of the situation. For the moment, such a decision is not necessary, not even in the case of the western city of Timisoara, where several cases of COVID-19 infection have been reported. The Romanian President has in turn made an appeal to calm, realism and balance, for social life not to be affected by mistrust and fake news. The Foreign and Interior Ministries have informed the diplomatic missions and international organizations accredited to Bucharest about the measures that apply both to the Romanian citizens and to the foreign citizens who come to Romania from areas affected by the coronavirus epidemic.



    Warning from Brussels



    The European Commission has opened the Excessive Deficit Procedure for Romania and adopted a recommendation according to which Romania should put an end to this situation in 2022 at the latest. A report passed by the EC in February shows that Romania does not observe the deficit criterion defined in the treaty, of maximum 3% of the GDP. According to the EC winter forecasts, Romanias deficit reached 4% of the GDP in 2019 and it is expected to go up to 4.9% in 2020 and to 6.9% in 2021. The pension law is ‘the main cause of the forecasted rapid growth of the government deficit and of the risks posed to fiscal sustainability the report also shows. The interim finance minister Florin Citu claims Romania has a sustainable and credible plan to reduce the deficit, which was accepted by the EC entirely.



    Looking for a government



    This week has seen hearings in Parliaments special committees of the ministers proposed for the cabinet of the Liberal PM designate Florin Citu. The positive or negative reviews the ministers have obtained are consultative, with the investiture vote being expected to take place in the plenum of Parliament next week. The only modification in the new government is the finance minister, Lucian Ovidiu Heius, who replaced Florin Citu, now designated PM. Citu was nominated PM by President Iohannis after the Constitutional Court ruled as unconstitutional the re-designation as PM of the outgoing interim PM, the Liberal leader Ludovic Orban, who had previously been dismissed from the position through a no confidence motion.



    Files



    The manager of the Maramures County Emergency Hospital (in the northwest) and a former Social Democratic health minister Sorina Pintea has been placed into temporary custody for 30 days, on charges of continued bribe taking. According to anti-corruption prosecutors, she allegedly received bribe, through an intermediary, from the representatives of a company. The money, 10 thousand Euros and 120 thousand lei, accounted for 7% of the value of a contract concluded with the respective company for repair works to the respective hospital. In another file, the president and director general of the Romanian Radio Broadcasting Corporation (SRR) Georgica Severin has been heard by the Caraş-Severin Directorate for Investigating Organized Crime and Terrorism (in the southwest). The prosecutors from Reşiţa announced they started the prosecution of 16 politicians and public persons who are accused of blackmail and having set up an organized crime group. These persons allegedly blackmailed the heads of several public institutions, who were thus dismissed and replaced by people loyal to the former Social Democratic (PSD) government. Prosecutors also heard other Social Democratic local politicians and the former secretary general of PSD, Codrin Stefanescu. According to a SRR communiqué, Georgica Severin has always responded promptly to all the requests of the states authorities and institutions and will continue to do so.



    Sports



    The Romanian mens handball champions Dinamo Bucharest defeated Sporting Lisbon of Portugal in the Champions League playoffs, thus qualifying to the round of 16. In the next round Dinamo will take on Paris Saint-Germain of France. In the womens competition, both the Romanian champions and the vice-champions, SCM Ramnicu Valcea and CSM Bucharest, respectively, qualified to the Champions League quarterfinals. In news from football, the Romanian national team has been drawn in Group 1 in League B, alongside Austria, Norway and Northern Ireland in the 2020-2021 Nations League. Romania is now part of the second division after having performed last year in the third tier. Romania failed to qualify to the 2020 European Championship directly, straight out of the preliminaries, although our team still holds chances of qualifying from the Nations League playoffs. On March 26 Romania will play Iceland away from home. If it wins, Romania will take on the winner of the match pitting Hungary against Bulgaria. The draw for the 2020 European Championship was held in Bucharest on November 30. Romanias capital city will host four matches in the competition, three in the group phase and one in the round of 16. (Translated by L. Simion & V. Palcu)

  • Excessive Deficit Procedure for Romania

    Excessive Deficit Procedure for Romania

    The inevitable has eventually happened: the European Commission opened the Excessive Deficit Procedure for Romania, announced the acting finance minister Florin Citu, who has been designated to form a new government. In mid February, an EC report wrote that Bucharest did not observe the deficit criterion defined in the Treaty, which is limited at 3% of the GDP and that opening the Excessive Deficit Procedure was justified.



    According to the EC winter forecasts, Romania’s government deficit reached 4% of the GDP in 2019 and it is expected to go up to 4.9% in 2020 and to 6.9% in 2021. The increase in the budget estimates is mainly based on a forecasted pension rise by 40%, scheduled to take effect as of September 2020, and on a new pension recalculation scheduled for September 2021. The pension law is the main cause of the estimated rapid growth of the government deficit and of the risks posed to fiscal sustainability, the EC also shows, its comments being actually in line with the repeated warnings of the Romanian analysts and experts. They also speak about a possible budgetary quake if pensions are increased by the entire amount stipulated, and not in stages.



    Moreover, the EC noticed that between December 2019 and January 2020 the Romanian authorities adopted new tax cuts and doubled child allowances. In other words, they put additional pressure on the budget, in an irresponsible populist move, the same experts claim. Still, the finance minister says that Romania has a sustainable and credible plan to reduce the deficit, which was negotiated and accepted by the European Commission.



    One month ago, the Romanian authorities sent a letter to the Brussels officials in which they claim that the deterioration of the budget deficit in 2019 can be accounted for, to a great extent, through the increased expenses for personnel, social assistance and investments, while the share of revenues within the GDP remained greatly unchanged. Also, the Romanian authorities underline that the fiscal-budgetary strategy for the period 2020-2022 shows a gradual adjustment of the budget deficit on medium term, even if the percentage remains above the reference value of 3% of the GDP until 2021.



    The EU recommends Romania to take measures in order to overcome the Excessive Deficit Procedure by 2022, the adjusted values being 3.6% for 2020, 3.4% for 2021 and 2.8% for 2022. According to the finance minister, during the talks with the EC representatives, he underlined the Romanian government’s firm commitment to applying a responsible and sustainable fiscal policy and that the reduction of the deficit should be made in such a way not to endanger the country’s economic growth. The draft recommendation of the Council of the EU is to be discussed and adopted at the meeting of the Economic and Financial Affairs Council (ECOFIN) on March 17. (translation by L. Simion)