Radio România Internațional

Tag: expenditure

  • December 30, 2024 UPDATE

    December 30, 2024 UPDATE

    GOVERNMENT On Monday, during its last meeting this year, the government of Romania passed an emergency order cutting down public sector spending in 2025. The bill agreed on by the leaders of the ruling coalition (comprising the Social Democratic Party, the National Liberal Party and the Democratic Union of Ethnic Hungarians in Romania) includes measures such as suspending public sector employment or freezing pensions and salaries of public sector employees at the 2024 level. In addition, overtime will no longer be paid and no bonuses or premiums will be granted. The government claims that these measures are aimed at reducing public spending by almost EUR 4 billion, i.e. 1% of GDP. To this end, the Cabinet has set up a department made up of experts working pro bono to increase the efficiency of the government’s work. The state budget law for next year will be passed by the government in January and sent to Parliament for endorsement in a special session.

     

    PROTESTS Penitentiary police Monday picketed the Government headquarters in Bucharest, protesting the measures to reduce public expenses. They claim they would lose up to 30% of their salaries because of the enforcement of the new provisions. Also on Monday, several trade union and employer organisations in Romania issued statements criticising the measures designed to cut expenditure in the public system. Trade unions in the education sector are against the salary freeze, while the largest trade union federation in public administration and social assistance, Columna, complains that the order had been drafted without social dialogue. The energy sector employers federation also cites the lack of consultations, criticising the introduction of a tax on special constructions. The Romalimenta Employers’ Federation warns that the food industry is receiving another blow with the cancellation of tax facilities benefitting employees in the sector. In turn, representatives of small and medium-sized enterprises say that lowering the tax threshold for SMEs and increasing the tax on dividend will have catastrophic effects for Romanian entrepreneurs. The American Chamber of Commerce in Romania also voiced concerns about the fiscal measures adopted by the Government, which, it believes, put the business environment in a difficult situation and further affect economic predictability and investor confidence.

     

    PRICE HIKES Romanians will be paying more for petrol and diesel as of January 1, due to a 6% rise in the fuel excises, according to a document released recently by the Finance Ministry. A litre of petrol will cost 3 Eurocents more, and diesel will have almost the same price. Excises on alcohol beverages will also grow by 4.4% as of January 1. Local taxes and duties will be adjusted to the inflation rate, but the decision in this respect is going to be made by city halls. The Bucharest General Council has decided to raise these taxes by 10.4%.

     

    UNEMPLOYMENT The unemployment rate in Romania was 3.28% at the end of November 2024, with the total number of unemployed people reaching 261,511, the National Employment Agency announced. At the end of October, the national unemployment rate was 3.20%. Unemployment in rural areas is almost 3 times higher than in cities. The 40-49 age bracket and men have the highest share among the unemployed. Middle school graduates account for 33.56% of the total registered number of unemployed people, while those with university degrees only account for 4.56%.

     

    BORDERS The Romanian Border Police is ready to join the Schengen area with land borders as of January 1, 2025, when border controls will be eliminated at 40 road, rail and port checkpoints. According to a statement issued by the Border Police General Inspectorate, as of next year travelling to and from other Schengen member states will be similar to a trip within the country. However, people who intend to travel to the territory of another Schengen state must have a valid travel document, namely a passport or identity card, because Romanian border police will carry out random checks, the statement also reads.

     

    DIPLOMACY Romania’s foreign ministry Sunday night said that on December 18 the Romanian ambassador to NATO conveyed Romania’s disapproval over the distribution of a geographic atlas comprising maps featuring the so-called, ‘greater Hungary’. “The atlas is of an inflammatory nature with respect to the strategic partnership between Romania and Hungary and their capacity as NATO allies. The foreign ministry in Bucharest reiterates the view it has consistently conveyed to the Hungarian authorities, that any provoking statement and gesture is not likely to help consolidate the partnership relations between Romania and Hungary. The shared history must remain a subject for historians to study,” Bucharest says. Dismantled at the end of World War I, the so-called ‘greater Hungary’ included territories occupied by Budapest, which today belong to Romania, Slovakia, Croatia and Slovenia. (AMP)

  • Tax and budget-related measures

    Tax and budget-related measures

    The budget deficit remains one of the weaknesses of the Romanian
    public administration, and the government made up of the Social Democratic
    Party and the National Liberal Party promises to remain strict in terms of
    public spending. The Cabinet has taken responsibility for a set
    of measures aimed at reducing waste by restricting procurement, reducing
    executive positions and merging public institutions, scrapping some tax
    facilities, fighting fraud and tax evasion.


    Moreover, as of November 1, a new emergency order takes effect,
    concerning year-end expenditure. The order introduces restrictions for public
    institutions and local administration units, including with respect to the organisation
    of festivals and competitions. Authorising officers may no longer contract
    office supplies and other goods and services used in maintenance and repair works.


    The finance minister Marcel Boloş says that in the past, in November
    and December expenses with goods and services were two, three or even four
    times higher than in other months, which is why the Cabinet decided that such
    expenses must not exceed the average level of the first 10 months of the year.


    The order also stipulates that payment of the salary rights for
    which public sector employees have won lawsuits will be postponed to 2024. The
    Social Democratic PM Marcel Ciolacu promises however that there are no reasons
    to worry and that the government has enough funds to cover salaries and other
    expenses, and pension benefits will be raised by 13.5% as of January 1, 2024 to
    cover inflation.


    The new measures were taken by the government after last week the
    European Statistics Office (Eurostat) announced that Hungary (6.6%) and Romania
    (6.3) are the countries with the highest budget deficit of the 27 EU member
    states.


    Also last week, during talks regarding the European Union budget,
    the president of Romania Klaus Iohannis called for rethinking the way in
    which budget deficits are determined. At the European Council meeting in
    Brussels, the Romanian president said the new EU budget should meet current
    challenges, such as the support for Russia-invaded Ukraine, the security crisis
    in the Middle East and the drop in the competitiveness of the EU economy.


    The request comes after, for 3 years in a row, Romania exceeded
    the budget deficit agreed on in the Stability Pact, the EU instrument that compels
    member states to keep their budget deficits within sustainable limits, so as
    not to lead to macro-economic imbalances. Iohannis also asked for the budget
    revision not to affect the agriculture and cohesion allocations, the two major
    directions through which the EU is financing Romania’s development. (AMP)

  • New budget-related legislation promulgated

    New budget-related legislation promulgated

    Subject to an excessive
    deficit procedure for several years now, Romania has undertaken to bring this
    indicator in line by next year. But the deficit figures are still worrying: in
    the first 9 months of the year, the deficit deepened by some EUR 3 bln compared
    to the corresponding period last year.


    The government spent more than
    it collected, and according to official data at the end of September the
    deficit was 3.55% of GDP. At this rate, economic analysts say, it is rather
    unlikely that Romania will be able to meet the deficit target of 4.4% of GDP or
    at least the 5.5% discussed by the authorities in Bucharest with Brussels.


    The financial analyst Adrian
    Codirlașu, vice-president of CFA Romania, says this is because in the budget
    law drafted early this year, the expenditure was underestimated and revenues
    were overblown, which might push the budget deficit even over 6% of GDP by the
    end of 2023. The stakes are particularly high given that, unless this problem
    is addressed, Romania risks losing substantial funding under the National
    Recovery and Resilience Plan.


    A large-scale set of tax and
    budget related measures has been drawn up by the government, which took
    responsibility for it before Parliament to rush its endorsement. The measures
    include tax raises, new taxes and the scrapping of tax facilities. Delayed for
    a month after the Opposition challenged it at the Constitutional Court, the
    bill eventually reached president Klaus Iohannis’ office, and it was signed
    into law on Thursday.


    Some of the provisions in the Law
    on tax and budget related measures to ensure Romania’s long-term sustainability
    will take effect within days, while the others will be enforced as of January
    1, 2024. Meanwhile, PM Marcel Ciolacu is also expecting proposals concerning
    the reorganisation of ministries and government agencies and corporations, as
    the budget reform is also intended to help reduce expenditure.


    But figures suggest that these
    measures are not enough, and more is needed in order for the deficit to be
    narrowed by the end of the year and for Romania not to lose tens of millions of
    euro in EU funding, PM Marcel Ciolacu explained, particularly since expenditure
    usually tends to increase at year end. This is why a new emergency order is
    required in order to reduce expenses, decision-makers in Bucharest announced.


    By capping public sector and
    city hall spending, including the expenses incurred with organising festivals
    and competitions, Romania would have some room to breathe, and the risk of
    undesirable financial consequences would be alleviated. Also, PM Marcel Ciolacu
    traveled to Brussels on Thursday to persuade the European Commission that the
    measures taken by his Cabinet are enough to keep the budget deficit on a
    positive trend. (AMP)

  • October 18, 2023

    October 18, 2023

    GOVERNMENT The first joint meeting of the Romanian and Ukrainian governments takes place in Kyiv today. The agenda includes the development of
    infrastructure in the border region, economic cooperation and regional security.
    The main topic is a mechanism allowing Ukraine to export grains to Romania. First
    of all, the grain quality must be similar to that of grains in Romania and the
    EU, and secondly, only the Romanian farmers who prove they no longer have grain
    stocks will be authorised to import from Ukraine. Another topic is the ethnic
    minorities in Ukraine, with Bucharest requesting that their rights be the same
    as the rights enjoyed by minorities in Romania. The Romanian government
    believes Ukraine should no longer recognise the Moldovan language, arguing that
    in fact it does not exist. Marcel Ciolacu is accompanied by the minister of
    defence, Angel Tâlvăr, the minister of public health, Alexandru Rafila, the
    economy minister, Radu Oprea, the agriculture minister, Florin Barbu and the
    secretary of state with the interior ministry, Raed Arafat. The Romanian PM
    will have talks with his Ukrainian counterpart Denys Shmyhal, and with the
    chairman of the Ukrainian parliament, Ruslan Stefanchuk. Marcel Ciolacu is also
    scheduled to meet the Ukrainian president Volodymyr Zelenskyy, who was in
    Bucharest last week.


    BUDGET The Constitutional Court dismissed the
    notification filed by Save Romania Union and the Force of the Right in
    opposition in Romania with respect to the bill on fiscal and
    budget-related measures for which the Government has undertaken responsibility
    before Parliament. The Constitutional Court president, Marian Enache, said the
    Cabinet’s responsibility concerned a sole and unified purpose, namely to
    increase revenues to the public budget and to cut down on expenditure, and that
    the responsibility procedure was in line with the requirements of the
    Constitutional Court and its case law. Marian Enache also says the Court’s
    decision was made on a majority of votes. After the decision of the
    Constitutional Court, the bill may be signed into law by the president of
    Romania, Klaus Iohannis.


    GAZA
    The Romanian foreign ministry voices shock and deep sadness at the news of the
    blast and loss of innocent lives on Tuesday night at
    the Al Ahli hospital in Gaza. In a message issued on Wednesday, the
    ministry emphasises that all civilians and civilian infrastructure must be
    protected at all times, and that responsibility must be
    clearly identified. Hundreds of people were killed or wounded
    in a missile strike on the hospital in Gaza, for which Israel and the
    Palestinians blame each other. The Israeli army denies that its forces were
    responsible for the attack, and blames the incident on a failed launch of a
    missile from Gaza by the Islamic Jihad, another Palestinian armed group, which
    in turn denies the allegations. The attack was condemned by the international
    community, with several Arab leaders accusing Israel of war crimes. The US leader Joe Biden, who is on a solidarity
    visit to Israel today, has voiced regret and anger at the event. Jordan has
    cancelled a summit in which Joe Biden was to discuss the war with King Abdullah II, with
    Mahmoud Abbas and the president of Egypt Abdel Fattah al-Sisi. On the other hand, the UN secretary general
    Antonio Guterres will be in Cairo on Thursday, for talks with Abdel Fattah al-focusing
    on the delivery of humanitarian aid to Gaza. The talks take place as Egypt calls on Israel to allow aid
    shipments to that territory. On Tuesday,
    the US authorised its non-essential embassy staff to leave Beirut, as security
    worsens in Lebanon as well, in the context of the war between Israel and Hamas.


    ALERT Belgium,
    France, Italy and Spain have raised their terrorist alert levels to a maximum, following
    attacks in western Europe over the past few days. On Monday 2 Swedish nationals
    were killed in Brussels by a Tunisian illegal migrant, later on identified and
    shot by the Belgian police. The Islamic State group
    claimed the attack and said it targeted Sweden because of its affiliation to
    the global coalition against Jihad movements. On Tuesday, Versailles palace
    in Paris was evacuated and stayed closed for the day after a new bomb alert,
    just as it happened with the Louvre Museum on Saturday. The president of France
    Emmanuel Macron said Islamic terrorism is rising once again and that all
    European countries are vulnerable to this threat. Over 100 people have been
    arrested over the past week in France under anti-Semitism charges and for
    terrorism support. On Tuesday, EU leaders, including the president of Romania
    Klaus Iohannis, discussed the conflict between Israel and Hamas which killed more
    than 4,000 people in the last 10 days, and agreed to do whatever they can to
    avoid a regional escalation of the conflict. (AMP)

  • November 17, 2022 UPDATE

    November 17, 2022 UPDATE

    BUDGET The
    government of Romania Thursday approved this year’s second public budget
    adjustment, with an approx. EUR 104 million increase
    in revenues and a similar increase in
    expenditure. According to the government, the budget adjustment covers
    compulsory spending, operating expenses and social assistance expenses. Funds
    have also been rechanneled for implementing programmes with an impact on the economy
    and which support households and companies. Financing is also ensured for the
    state aid provided to the farmers whose crops were affected by drought this
    year. According to the autumn macroeconomic forecast on which the adjustment is
    based, the government’s news release also reads, Romania’s GDP is expected to
    reach RON 1,396.2 bln in 2022 (as compared to RON 1,372.5 bln taken into
    account in the first budget adjustment).


    INFLATION The annual inflation in the EU continued to grow in October
    to reach 11.5%, as against 10.9% in September. The member states with the
    highest rates are Estonia (22.5%), Lithuania (22.1%), Hungary (21.9%) and
    Latvia (21.7%), according to data made public on Thursday by the Eurostat.
    Compared to September, the annual inflation rate dropped in 11 member countries,
    remained stable in 3 countries and went up in 13 member states, including in
    Romania (from 13.4% to 13.5%). As many as 18 member countries, Romania
    included, reported for September an annual inflation rate above 10%. The member
    states with the lowest inflation rates in September were France (7.1%) and
    Spain (7.3%). In October 2021, the year-on-year inflation rate in the European
    Union was 4.4%, and in Romania it was 6.5%. In Romania, the National Statistics
    Institute had previously announced that the year-on-year inflation dropped this
    October to 15.32%, from 15.88% in September, with a 20.58% rise in foodstuff
    prices, non-food prices going up 14.37%, and service prices 8.31% more expensive.
    Just days ago, the National Bank of Romania also released its quarterly
    inflation report, according to which the rate is expected to reach 16.3% by the
    end of this year and 11.2% next year.

    DIPLOMACY The Romanian foreign minister Bogdan Aurescu
    Thursday had talks with his counterpart, Jean Asselborn, during his visit to
    the Grand Duchy of Luxembourg. The two officials discussed Romania’s Schengen
    accession and the security situation at the Black Sea. Bogdan Aurescu also
    mentioned, in a joint press conference, the importance of the Republic of
    Moldova’s European accession, and said on Monday he would co-chair the third
    Support Platform for the Republic of Moldova, in Paris, together with his
    French and German counterparts. The Romanian official also thanked Luxembourg
    for its plans to deploy a 25-troop unit as part of the NATO Battle Group in
    Romania. The decision is pending the approval of Luxembourg’s parliament.


    MILITARY A second shipment of French military equipment, specifically Leclerc tanks,
    reached Braşov County (central Romania). The equipment is intended to strengthen
    the NATO Battle Group (Battle Group Forward Presence-BGFP) stationed in Cincu,
    the Romanian ministry of defence (MApN) said. A first convoy of French military
    equipment, consisting in armoured vehicles, arrived in Romania on October 23.


    ASSESSMENT A mixed team of experts from the European Commission and some member
    states, including the Netherlands, will be in Romania this week to assess the
    country’s readiness for Schengen accession. According to the Bucharest
    government, the visit is voluntary, similar to the one that took place between
    October 9 and 11. On Wednesday, the European Commission requested that Romania,
    Bulgaria and Croatia be part of the Schengen Area without
    delay. The EC points out that Romania has a solid and high-quality border
    management and is involved in international cooperation in border police
    matters.


    HANDBALL Two Romanian players, Cristina Neagu and Crina Pintea, were
    nominated for the all-star team of the European Women’s Handball Championship
    hosted by North Macedonia, Montenegro and Slovenia and due to conclude this
    Sunday. According to the EHF website, Cristina Neagu is nominated for the left
    back position, and Crina Pintea for line player. Neagu announced on Thursday that
    the EHF Euro 2022 was the last in her career, and that it had not ended as she
    had dreamt, after Romania finished only 12th. With 303 goals, Cristina
    Neagu is at the top of the combined all-time goal scorers’ list for Women’s and
    Men’s EHF EURO events. Romania has taken part in all the EHF Euro editions so
    far, with one exception (2006), and its best performance was a bronze medal in 2010. (AMP)

  • September 10, 2022

    September 10, 2022

    KING King Charles III was officially proclaimed
    monarch in a ceremony held at St. James’s Palace in London on Saturday, by the Accession Council, a body convened to confirm the new British
    monarchs throughout history.
    Also today, the Cabinet will have their first meeting with King Charles III,
    just days after PM Liz Truss formed a new government. Thousands have gathered in front of Buckingham Palace, the main
    residence of British monarchs in London, to pay tribute to Queen Elizabeth II,
    who passed away on Thursday, aged 96, at Balmoral
    Castle in Scotland. She will be brought to London, at Westminster Hall, and
    the public will have 4-5 days to say goodbye. The
    funerals will take place at Westminster Abbey, the church where British kings
    are crowned. The BBC notes that the last funeral of a monarch at Westminster
    Abbey took place in the 18th century. After the funeral, to be attended by
    heads of state and government from around the world, the Queen will be taken to
    Windsor Castle and buried in the Saint George Chapel within its premises.


    ENERGY EU energy ministers voiced support for emergency
    measures in response to the energy crisis, and even mentioned price capping for
    natural gas imports. At Friday’s extraordinary meeting in Brussels, officials
    for the 27 Member States agreed that a unified approach was needed to address
    the rise in energy prices caused by Russia’s invasion in Ukraine. They gave the
    European Commission several days to come up with a solid and concrete plan, said
    the Czech industry minister Jozef Sikela, whose country holds the rotating
    presidency of the Union. Romania, who was represented by the energy minister,
    Virgil Popescu, pleaded for measures such as a price cap on Russian gas imports
    or an EU-wide platform for the joint procurement of natural gas. As for cutting
    down consumption, Bucharest said this should be voluntary, depending on
    national capacities and market developments.


    FLIGHTS The national airline TAROM provides today
    2 additional flights to Greece to repatriate the Romanian passengers abandoned
    by the low-cost operator Blue Air, which announced it lacked funding even for
    fuel. TAROM has so far organised 4 other special flights, to Israel, Greece,
    Cyprus and Spain. Several thousand Romanians have been stranded in
    international airports since Tuesday night, when Blue Air announced it was
    suspending flights. Although the authorities have unfrozen the accounts of the
    airline, which had excessive debts to the Romanian state, Blue Air said it
    would only resume flights on 10 October. The transport minister Sorin Grindeanu
    urged Blue Air customers to try to find other options to return, and pointed
    out TAROM could not replace all the flights that had been cancelled. In 2020, during
    the COVID pandemic, Blue Air took out a state-guaranteed loan of over EUR 60
    mln. This summer, it was fined EUR 2 mln by the Consumer Protection Authority, for
    cancelling over 11,000 flights in 2021 and 2022. Blue Air’s current estimated
    debts amount to EUR 230 mln.

    AUTOMOTIVE Romania’s
    automotive industry output went up nearly 25% in July and August, compared to
    the corresponding period of 2021. According to the Automotive Producers
    Association, more than 61,000 vehicles were assembled in the Ford plant in
    Craiova and Dacia-Renault plant in Mioveni. In the first 8 months of the year, over
    330,000 vehicles were produced, accounting for a 15.5% increase since 2021.


    UKRAINE Romania and 3
    other EU member states (Greece, Poland and Lithuania) call on the European
    Commission to grant them exemptions from the budget deficit rules, with respect
    to military expenditure, in order to be able to make the investments required
    after the Russian invasion in Ukraine. They want this expenditure excluded from
    the deficit calculation, so that the 3% of GDP ceiling required by the EU may
    be observed. The 4 countries argue that this would help them mitigate the risks
    facing the Union. Meanwhile, a report made public by the World Bank, the
    Ukrainian government and the European Commission indicates that Ukraine’s
    reconstruction after the Russian invasion may cost around USD 350 bln, with figures set to increase in the coming months,
    as the war continues. According to the report, reconstruction and revamping
    needs in the social, industrial and infrastructure fields are 1.5 times higher
    than Ukraine’s GDP in 2021. Russia’s aggression had caused direct damages of
    over USD 97 bln by 1 June, with the most affected areas including housing (40% of
    the total damages), transports (31%), trade and industry (10%). The regions of Donetsk,
    Luhansk and Kharkiv are the most heavily hit, followed by Kyiv, Chernihiv and
    Zaporizhzhia.


    TENNIS The Romanian tennis players Sorana Cîrstea and Irina Begu,
    ranking 37 and 42 in the world, respectively, take part in the first edition of
    Ţiriac Foundation Trophy, held between the 10th and 18th September in
    Bucharest. The 2 players received wild cards from the organisers, and their
    current world rankings makes them seed no 1 and 2 in the tournament hosted by
    the Romanian capital city. Ţiriac Foundation Trophy is a WTA 125 tournament
    organised by the Romanian Tennis Federation and supported by the Ţiriac
    Foundation and the Sports Ministry. The main draw includes 32 players, and the
    doubles competition involves another 16. They compete for USD 115,000 in total
    prize money and 160 points in the WTA ranking. (AMP)

  • 2020, a difficult year for the economy

    2020, a difficult year for the economy

    According to a report on 2020 put together by the Finance Ministry, at the end of December Romanias budget deficit was nearly 10% of the GDP, double the figure for 2019.



    The reasons for this increase are, on the one hand, the fall in budget revenues in March – December and the postponement of some tax payments by business operators, due to the coronavirus pandemic. Also contributing to this deficit were the stepped-up VAT returns designed to support private sector liquidity and the bonuses grated for the timely payment of profit and revenue taxes.



    As regards budget expenditure, increased public investments were accompanied by exceptional payments required by the pandemic. Also, in order to mitigate the negative economic effects of the healthcare crisis, a number of governmental programmes were implemented, designed to support small and medium enterprises and large companies by means of state guarantees.



    Specifically, the report reads, 4.45% of GDP was channelled into the economy through various tax facilities, investments and exceptional expenditure entailed by the corona crisis. And this came against the general background of the economy shrinking in 2020.



    The unfavourable dynamic was also influenced by a fall in revenues from excises on energy products, as work-from-home rules and limited tourism activities dealt a heavy blow to fuel consumption.



    According to the National Bank, the main risk incurred by the Romanian economy this year is the way in which the start of fiscal consolidation will reflect on the state budget. The central bank estimates that only in 2022 will the national economy revert to the level reported in 2019.



    These days, the government is working to finalise this years state budget, based on a deficit target agreed on by Romania and the European Commission of around 7%. As the Liberal PM Florin Cîțu put it, this years budget must support economic recovery and lay the foundations for a strong economy in 2021-2024.



    The bill is to be submitted to Parliament in February, accompanied by a large-scale package of reforms in 3 areas—public sector salaries, public pensions and fiscal administration.



    The Social Democrats, in opposition, accuse the government of preparing austerity measures, and have drafted their own version for the state budget, claiming that an increase in Romanians living standards is achievable. (translated by: A.M. Popescu)

  • The Week in Review November 21-18

    The Week in Review November 21-18

    Romania, 9 months since its first coronavirus case


    Nine months after the first coronavirus infection was reported in the country, during which hundreds of thousands of other cases have been confirmed, the daily number of Sars-CoV-2-related deaths remains high, and so does the number of patients in intensive care.



    Experts warn that although the daily number of new cases has been on a slight decrease since the beginning of this week compared to last week, this is not enough to be optimistic. They believe that only after 14 days with a positive trend can the situation be assumed to be stable.



    Authorities introduced local lockdowns in areas with high infection rates. The results are already evident, and the rate is dropping. The restrictions introduced nation-wide, such as the compulsory face covering both indoors and outdoors, nighttime curfews and the switch to online classes in schools have also played a part.



    President Klaus Iohannis said Romania will not go under full lockdown after the general election due on December 6. However, this is not the time for relaxation, he said, and urged citizens to continue to observe the safety measures and to spend the winter holidays with the members of their own households.



    The president also voiced hopes that as soon as conclusive data is published, Romanians will be less skeptical with respect to a vaccine. According to a poll run by the Avangarde Social and Behavioural Studies Group, only 30% of the Romanians would get the coronavirus vaccine as soon as one is available in the country.



    Meanwhile, Romanian authorities are presenting the anti-COVID vaccination strategy, which is seen as a matter of national security. The strategy will be submitted for endorsement by the Supreme Defence Council next week. Healthcare and other key sector personnel and high-risk social categories will be the priority groups to receive the vaccine.



    The National Defence Ministry will play a very important role in supporting inter-institutional efforts during the anti-COVID vaccination campaign, providing the logistic means for this national campaign. The distribution strategy also takes into account the specific transport and storage requirements for each vaccine.



    The government approved the 3rd budget adjustment this year


    The Romanian Government Monday adopted the 3rd and last budget adjustment this year, one that takes the budget deficit to roughly 19.5 billion euros. Unlike earlier predictions, the budget deficit will reach 9.1% of GDP by year end, and the economy will shrink by 4.2%.



    PM Ludovic Orban said the adjustment was required in order to cover the expenditure incurred with the COVID-19 pandemic, with the payment of increased pension benefits and balancing local budgets. He explained that new challenges and expenses had to be handled, as the pandemic and a number of recent laws have increased the pressure on the state budget.



    Additional funds will be earmarked to the Labour Ministry for pension, furlough and flexible working time payments. The Health Ministry will also get more money for the anti-COVID efforts, including bonuses for ambulance staff, who had not been included in the original regulation providing bonuses to healthcare staff fighting the pandemic.



    The finance minister Florin Cîţu announced an increase in Romanias contribution to the EU financial effort to produce a vaccine against SARS-CoV-2. He explained that this budget adjustment also ensures that public investment projects worth around 11 million euros will be carried on. Public education and agriculture have also received additional funds. The Agriculture Ministry will therefore be able to pay compensations to the farmers affected by this years drought. On the other hand, budget cuts were operated, affecting the Finance Ministry and the Interior Ministry, the Presidential Administration and the Chamber of Deputies.




    Bucharest presents National Recovery and Resilience Plan


    The Government of Romania Thursday night presented the National Recovery and Resilience Plan, which will use EU funding to help the Romanian economy overcome the crisis generated by the COVID-19 pandemic. The plan is designed to ensure the accelerated development of the country in the coming 4 years, and the EU money will be spent on new hospitals, hundreds of kilometres of motorway, school infrastructure and the digitization of public administration.



    Under the plan, over 30 billion euros will be invested in the most important sectors of the Romanian society. Of the total, non-reimbursable grants amount to nearly 14 billion euro, and loans at favourable interest rates contracted by the European Commission on behalf of the member states account for the balance.



    The plan has been subject to public debate as of Thursday, with civil society invited to make suggestions, to be reviewed by the Government. After that, the plan will be sent to Brussels. Several NGOs working in the education, healthcare and social fields have already voiced their intention to contribute to the document, which, they say, must include first and foremost support measures for vulnerable categories and pay special attention to underprivileged youth and children, helping them to complete their education. (translated by: A.M. Popescu)

  • November 20, 2019 UPDATE

    November 20, 2019 UPDATE

    ELECTIONS The campaign ahead of the second round of Romania’s presidential elections on Sunday continues until Saturday morning at 7 am local time. The incumbent president Klaus Iohannis, who is endorsed by the National Liberal Party, now in power, is facing the former Social Democrat prime minister Viorica Dancila. The Standing Electoral Authority has announced that the electoral register has been updated and the total number of voters in the lists is 18,217,411. The total number of citizens residing abroad and entitled to vote in this election is 715,064. In the first round, which included 14 candidates, Iohannis won almost 38% of the votes and Dancila a little over 22%. Voter turnout stood at 51.19%. In the diaspora, where voting took place over three days, a record turnout was reported, with 675,000 people casting their ballots. The second round of voting is also taking place over three days abroad: on Friday between 12 am and 9 pm and on Saturday and Sunday between 7 am and 9 pm, with the possibility for the voting to be extended until midnight. The foreign ministry has already distributed the materials needed for the voting process abroad. 4 million, six hundred and eight thousand and 175 ballots were distributed among the 835 polling stations set up abroad, 100,000 more ballots than was requested in the first round.




    FINANCE The European Commission Wednesday recommended that Romania should implement an annual structural adjustment of 1% of the GDP in 2020, to ensure that the nominal increase in net primary government expenditure will not exceed 4.4%. Romania is also advised to use any exceptional revenues in order to reduce the deficit, with budget consolidation measures aimed at ensuring sustainable improvement of the government structural balance, able to encourage growth. Bucharest is also requested to present the Council with a report on the measures taken in this respect, no later than April 15, 2020.



    MEETING The Romanian Foreign Minister Bogdan Aurescu had a meeting on Wednesday with the US State Secretary Michael Pompeo, on the side-lines of the meeting of NATO foreign ministers in Brussels. The Romanian minister appreciated the US constant support for strengthening NATOs defence and deterrence posture on the eastern flank and pleaded for enhanced American military presence in Romania, given the volatile security context in the Black Sea region. He also reiterated the firm commitment of the new government in Bucharest for a fair sharing of responsibilities within NATO, confirming that Romania will continue to earmark 2% of its GDP to defence and to take part in foreign military missions. Also on Wednesday, Bogdan Aurescu had talks with his French counterpart, Jean-Yves Le Drian, on which occasion he mentioned the Common Declaration on the Strategic Partnership signed in 2018 by the presidents Klaus Iohannis and Emmanuel Macron, which re-launched the bilateral relation.



    ARREST The owner of the Romanian company that provided pest extermination services to 2 apartment buildings in Timişoara, western Romania, was taken in pre-trial custody for 30 days, under accusations of manslaughter, bodily harm and trafficking in controlled substances. Three people died, including a 9-day baby, over 40 others, mostly children, are hospitalized, and the buildings have been evacuated. The tragedy caused panic among the locals, with scores of people requesting medical check-ups. Investigations have revealed that the substances used for pest extermination had been purchased on the black market and contained a highly toxic compound. Concurrently with the criminal investigation, new decontamination operations were conducted on Wednesday, and a Health Ministry team is running on-site tests.


    (translated by: Ana-Maria Popescu)

  • Disquieting Budget Figures

    Disquieting Budget Figures

    Romanias consolidated budget deficit stood at roughly 3.2 billion Euros in the first half of the year, accounting for 1.61% of the GDP. The deficit is twice as big as in the first six months of 2017, but remains below the level forecast by the government of 2.21% of the GDP. The figures have been made public by the Finance Ministry, which explained that in the first half of the year budget revenues were 13% higher, but expenditure grew significantly, at a 19% higher rate than in the same period of 2017.



    The data published by the Finance Ministry shows that revenues from social security contributions grew by 37%. The Ministry has also noted that the month of June saw an improved VAT collection rate, which also rose by over 15% as compared to the same month last year, but that on the other hand revenues from income and salary taxes went down by almost 22% against a reduced tax rate, from 16% to 10%. According to the same data, payroll expenditures saw the highest increase, by over 24% as compared to the first half of 2017, a situation caused by the pay rises granted to public employees. Expenses incurred for the procurement of products and services also went up by 10%, and the social assistance costs have also been significantly higher.



    Investment expenditure, which includes capital investments as well as expenses for development programmes funded from domestic and foreign sources, stood at 9.1 billion lei, 1.5 higher than the same period last year. A month ago, Ionut Dumitru, chair of the Fiscal Council, cautioned that the budget deficit in the first five months of the year is very big, being, first and foremost, the outcome of higher expenses. According to him, unless measures are taken the deficit could reach 3.5 – 3.6% of the GDP at the end of the year. According to the economic forecasts made public by the European Commission in mid-July, the budget deficit could reach 3.4% of the GDP in 2018 and make it to 3.8% in 2019.



    In another development, deputy Prime Minister Viorel Stefan has recently said that the budget deficit for 2018 will certainly be under the 3% ceiling specified in the EU treaties, and that the adjustment of the structural deficit with a view to meeting the mid-term objective is planned to begin in 2019.


    (translated by: Daniel Bilt)

  • Budget bills, closer to endorsement

    Budget bills, closer to endorsement

    The draft state budget and social security budget laws for next year have entered the parliamentary debate stage, after the specialised budget and finances committees in the Senate and Chamber of Deputies passed them last week. The state budget bill submitted by the Government was slightly changed in the committee, with the most important amendment concerning the transfer of nearly 1 billion euros to local budgets. The amendment, tabled by the Democratic Union of Ethnic Hungarians in Romania, stipulates an increase from 75% to 100% of the income tax quota channelled into the local budgets of administrative units. The Finance Minister Ionut Misa explains:



    “What I can tell you at this point is that most administrative units will be affected, particularly smaller ones. But we must make an analysis, see the exact figure and the impact of this amendment that has been approved.”



    The Finance Minister added that the amendment was designed to offset the income tax reduction from 16 to 10%. The impact of this amendment is yet to be established, but should the figure be substantial, it could push the budget deficit above the estimated limit, Ionut Misa also says.



    The Liberal Senator Florin Citu, in Opposition, says the debates in the parliamentary committees were smoother than in previous years. But the Liberals accuse the Government of increasing personnel and social assistance spending, and of cutting investments in order to make up for it. Florin Citu:



    “Of course we cannot back this budget structure, because it cuts down resources that should have been channelled into investments and takes them to salaries and social assistance instead. We will be reaching a 17-year peak of social assistance and salary expenditure, and record-low investment.”



    The Opposition also says that the revenues on which the public budgets rely are overestimated by at least 2 billion euros, and that the breakdown by expenditure category undermines the national economy.



    The 2018 state budget calculations take into account an economic growth rate of 5.5%, an average exchange rate of 4.55 leu for the euro and average monthly wages of around 565 euros. The Government expects next year’s budget deficit to account for 2.97% of the GDP and says funds have been allotted for the promised pay raises and the 10% increase in pension point value as of July 1, 2018.


    Parliament is to cast the final vote on the 2 draft laws on December 21.


    (Translated by A.M. Popescu)

  • The state budget and salary increases

    The state budget and salary increases

    Finance Minister Viorel Stefan on Monday addressed a Chamber of Deputies plenary session, at the request of the National Liberal Party, in opposition. The Liberals wanted to see if the Social-Democratic Party can live up to the promises made in the election campaign, which included salary increases.



    The Liberals say state budget revenues for the first quarter are lower than the level reported in the corresponding period of last year, and below what the 2017 budget law had predicted. The National Liberal Party even called on Minister Stefan to step down, listing as the main reasons the Governments decision to cut public investment and the low rate of tax collection. Here is Liberal MP Bogdan Hutuca:



    Bogdan Hutuca: “Its been only three months since the Government took office, and the Romanian economy already finds itself against the wall, without the Government even beginning to honour its promises to society. And its not just the budget revenues that took a heavy blow. Expenses too are off the charts. As a result of poor budget policies in the first three months of the year, we now find ourselves in a terrible spot, where three categories of spending, personnel, procurement and social assistance, account for 85,31% of total expenditure.



    In turn, the interim Liberal president Raluca Turcan says revenues for January and February account for half the original estimate for the first three months of the year, making it impossible for the Government to cover its spending in March.



    Finance Minister Viorel Stefan has dismissed the Liberals point of view, arguing that the financial results for early 2017 are in line with the Governments economic growth target of 5,2%. Over 44,000 new jobs have been made available, and public confidence in the economy has also gone up, Viorel Stefan also says.



    Viorel Stefan: “The budget estimates for the first quarter of 2017 indicate a surplus of 0.2% of GDP in the consolidated budget. At the same time, positive results have been reported in terms of revenues from income taxes and social security contributions, as a result of the spike in public sector salaries, of a good VAT and excise collection rate in March, as well as of a 4.5% cut in procurement expenses as compared to the same period last year.



    Minister Viorel Stefan went on to say he is waiting for the budget execution figures for the first quarter, before estimating the impact of the unified pay scale law on the budget.



    Viorel Stefan: “Regarding the budgets capacity to absorb this impact, it is too early for me to tell. Im waiting for the figures for the first quarter to come out, so I may have a clearer image of the share of salary expenses the total salary fund will manage to cover in the second half of this year, and what the next budget periods will have to absorb.



    The unified pay scale law for public sector employees is due to come into force on July 1, after being debated and voted by Parliament.