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  • Incomes and expenses in Romanian households

    Incomes and expenses in Romanian households

    Household spending in Romania increased in the third quarter of last year.

     

    In the third quarter of last year, a household in Romania had an average total monthly income of 8,255 lei, equivalent to about 1,650 euros, up 0.5% per household compared to the second quarter of the same year. According to the National Institute of Statistics, calculated for a single person, average monthly incomes were almost 3,300 lei, by 0.7% higher. Compared, this time, with the third quarter of the previous year, the average total monthly incomes of a household and those of a single person increased by just over 13%. Of the 8,255 lei earned in a family, last year, in the third quarter, most were spent. Higher by 9% compared to the previous year, the average monthly total expenses represented, in total, 85% of income.

     

    In 2024, an increase in the purchasing power of the population was recorded, according to financial analyst Adrian Codirlaşu, who explains why inflation is perceived as higher than the statistics indicate: ʺWe see an increase in expenses higher than inflation. It is true, there is also a volume component, because, as income increased, a larger quantity was purchased ; ideally it would be possible to separate the volume part from the price increase part. But it is possible that certain things that are part of the expenses are not included in inflation and that is why inflation is actually felt much stronger than it is in reality. In principle, the shares remained relatively similar to the previous period.ʺ

     

    The most important source of Romanians’ income was salaries and other salary rights, followed by those from social benefits, pensions,  unemployment or social assistance. In an urban household, the average total monthly income was 1.3 times higher than in rural areas, and, calculated for a single person, 1.5 times higher.

     

    Most expenses in the third quarter were incurred by the consumption of agri-food products, non-alcoholic beverages and non-food products, for the payment of utility bills, taxes, contributions, dues or fees, but also for the purchase of clothing and footwear. The lowest level of average monthly expenses of households in Romania was the one made for education. ʺ85% of incomes go to taxes and expenses,ʺ  the Bucharest press reports, concluding, ironically, that ʺRomanians have higher incomes, but spend almost everything.ʺ

     

     

  • December 29, 2024 UPDATE

    December 29, 2024 UPDATE

    A roundup of local and international news.

     

     

    ORDER – The Bucharest government on Monday, in their last meeting this year, will pass an emergency order that provides for the reduction of public sector spending in 2025. The project, agreed on by the leaders of the PSD-PNL-UDMR coalition, includes measures such as suspending state employment or freezing pensions and salaries for the public sector employees at the level of 2024. Moreover, extra-hours will no longer be paid and no bonuses or premiums will be granted. According to the draft order made public by the Ministry of Finance, the measures provided for in this ordinance will have a financial impact of about 26.6 billion euros next year. In 2025, budget revenues will increase by over 1.4 billion euros, and budget expenditure will decrease by about 25.2 billion euros.The unions criticized the provisions of the document and warned that protests will follow. As for the State Budget Law for next year, it is to be adopted by the government in January and sent to Parliament for adoption.

     

    CRASH – South Korea is observing seven days of national mourning after a Jeju Air plane carrying 181 people crashed while landing at Muan Airport, south of the capital Seoul. According to the latest data, there were only two survivors. It is the deadliest plane crash ever to occur in South Korea. The accident appears to have been caused by “bird strike, which led to a malfunction of the landing gear,” South Korean news agency Yonhap reported.

     

    SURVEY – More than half of Romanians say that 2024 has been, from an economic viewpoint, worse than the previous year for their country, according to an IRES survey. The war in Ukraine, the political crisis and the rising prices have been the main concerns in 2024. One in four Romanians is unhappy with the way they currently live, and a similar number say that they did not have a single reason for joy in 2024. The data also shows that politicians continue to be last in the ranking of categories that Romanians trust. Asked which event they think has had the most negative affect on Romania in 2024, more than 4 in 10 Romanians indicate the cancellation of the first round of the presidential elections, by the decision of the Constitutional Court. Over 60% believe that this decision was bad, while a third say it was good.

     

    ELECTIONS – The presidential elections in Romania could take place on March 23, 2025, the first round, and on April 6, the second round, according to the Bucharest media that cites political sources with the PSD-PNL-UDMR government coalition. Held on November 24, 2024, the first round was invalidated by the Constitutional Court (CCR), which, based on documents provided by the Supreme Council for National Defense (CSAT), grounded their ruling on the interference of an unnamed state. The second round, scheduled for December 8, was to be contested by the independent nationalist Călin Georgescu, accused of connections with Putin’s Russia, and by the leader of the USR (in opposition), Elena Lasconi. In the Diaspora, where the polling stations for the second round opened on December 6, tens of thousands of Romanians had already voted by the time the Court decided to invalidate the first round.

     

    TRAFFIC – Over 183,600 people, Romanian and foreign citizens, have crossed the borders of Romania in the last 24 hours, the border police have announced. As of January 1, 2025, when Romania joins the Schengen free movement area with land borders, 33 border crossing points with Hungary and Bulgaria, as well as from the Black Sea and the maritime Danube, will be permanently closed. These are 17 road and railway crossing points located on Romania’s western border with Hungary and 14 road points, including ferry crossings, railway and port points on the southern border with Bulgaria and two port crossing points in Brăila and Cernavodă. As of January 2025, there will no longer be checks at the borders with Hungary and Bulgaria at the crossing points. Such checks will be carried out only randomly, based on risk analysis.

     

    TENNIS – Romanian tennis player Jaqueline Cristian is in the main draw of the tournament in Auckland (New Zealand), which kicks off on Monday. The Romanian (26 years old, 85 WTA) will play in the first round against Ukrainian Iulia Starodubteva (24 years old, 101 WTA), a first-time meeting. We remind you that, on Saturday, Romanians Anca Todoni and Ana Bogdan qualified for the main draw of the WTA tournament in Brisbane, Australia.

  • Budget deficit reduction plan

    Budget deficit reduction plan

    By October 15, Romania should present the European Commission with a plan to reduce budget deficit, by October 15.

     

    Rating agencies, economists and analysts alike are signaling the excessive budget deficit, which could reach 8% of Romania’s GDP this year. European Union member states have to submit a deficit reduction plan to the Commission, by October 15 . Romania is among the countries that have not done so yet, but the Social-Liberal Government in Bucharest has promised to observe the deadline and present the 7-year plan to bring the deficit back within the limits accepted by the Union. The Romanian Minister of European Investments and Projects, Adrian Câciu: “This 7-year plan comes with a series of reforms which should not surprise anyone. They are included in the National Recovery and Resilience Plan. It is just an active calendar for those reforms to be conducted. From what I know and from what will happen – I hope it will happen, because I think we are a coalition of responsible people – by October 15 this plan will be submitted to the Coalition, approved and sent to the Commission. It is, after all, a general plan. It is the first assessment that we are sending, after which there will obviously be technical negotiations with the Commission, which may last until April 2025, when the Commission makes the last adjustment in the case of all member states. Romania is not the only country that is in an Excessive Deficit Procedure.”

     

    The most important fiscal-budgetary consolidation measures are those of reducing expenditure and, at the same time, further improving  collection to the state budget, following digitization,  Minister Câciu said. According to him, the reduction of unnecessary expenses in the area of ​​large public services must be continued, where the institutions need reform and quality increase. On the other hand, the digitization of the National Agency for Fiscal Administration (ANAF), must bring not only 0.5% of the GDP in recovered revenues , but  2% or 3% next year, Adrian Câciu said. Romania, the Minister explained, needs a 7-year deficit reduction plan, agreed on with the European Commission, given that it has very high investment-related expenses, which, in his opinion, nobody wants to postpone or cancel.

     

    The Bucharest Government has recently carried out the first budget revision this year, a positive one. It was based on a budget deficit of 6.9% of the GDP and a revised economic growth, from 3.4% previously estimated, to 2.8%. The Minister of Finance, Marcel Boloş, said on that occasion that additional funds had been allocated to the large investment projects, a leitmotif in the authorities’ speech. Boloş too, supported by his boss, Prime Minister Marcel Ciolacu, gave assurances that the deficit was sustainable.

  • Fiscal measures to reduce the budget deficit

    Fiscal measures to reduce the budget deficit


    A state budget deficit significantly above the target has prompted the Romanian authorities to take steps to address the situation.



    The finance minister Marcel Boloș announced on Thursday that this set of tax-related measures must be endorsed in September, first of all in order to ensure that EU funding is not suspended.



    “Not implementing these measures or implementing them too late would lead to a budget deficit of around 7% of GDP,” Marcel Boloș explained, and warned that this is a turning point for Romania.



    The set of changes announced by the finance minister includes measures targeting multinational corporations and a 10-fold increase in fines in order to curb tax evasion. Adding to these are increased royalties, even 1000 times, for mineral resources and hydrocarbons, and an extensive reorganization plan for the national tax administration agency in order to improve revenue collection.



    Marcel Boloş: “It is unfair for companies that develop mineral resources and have billions in turnover and huge profits to pay minimal, even insulting royalties to the state budget. These will be rearranged, and some royalty categories will be even 1,000 times higher. It is only reasonable. These are royalties for the exploitation of mineral resources and hydrocarbons as well as for the land itself, and it is ridiculous and absurd for the state budget to receive RON 2.5 million for 300,000 hectares.ˮ



    As for the measures targeting the public sector, Marcel Boloş mentioned decentralization and the regionalisation of public services, so as to eliminate what he called the “splurge” of public money.



    “We need a lot less bureaucracy, a lot more thoughtfulness in spending public money,ˮ Marcel Boloș pointed out. According to him, these measures are expected to have a combined impact of 2% of GDP.



    Meanwhile, the news from the Fiscal Council is not encouraging. The institution made an upward adjustment of its budget deficit forecast, and says the deficit will be over 6% of GDP unless correction measures are implemented. According to the Councils annual report, the budget deficit for the first half of the year, standing at 2.3% of GDP, is around 0.63% higher than in the corresponding period of last year. The reasons have to do with the slower dynamics of certain categories of revenues and an increase in spending above the levels in the budget law. The Council reiterated the importance of introducing immediate corrections and of substantially increasing tax revenues. (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)

  • August 19, 2022

    August 19, 2022

    BUDGET The Romanian
    government has endorsed the first budget adjustment this year, a positive one,
    based on a 3.5% growth of the revenue budget in the first six months and the
    budget execution in this period. Finance Minister Adrian Caciu believes the
    budget deficit can be kept under control and the 5.84% target at the end of the
    year is doable. The Fiscal Council, an independent watchdog monitoring the
    sustainability of fiscal and budget policies, has cautioned though that the
    latest adjustment can lead to an exceeded 7% deficit of the GDP, as the
    government has overrated the revenues and underrated part of the expenses.








    MARATHON 250 runners from 10 countries
    are to participate in one of the most difficult ultra marathons in Romania, the
    2X2 Race due to kick off on Saturday at the Balea Lake in the Fagaras
    Mountains, at an altitude over 2,000 meters, AGERPRESS news agency reports. The
    race is unique in Europe as most of it takes place at this staggering altitude.
    The 2X2 Race this year brings together runners from Romania, the Republic of
    Moldova, Hungary, Poland, Germany, the Netherlands, Great Britain, France,
    Israel and Russia. They are to run up to the Negoiu, the second highest summit
    in Romania, at an altitude of 2535 meters.








    REFUGEES According to
    the General Border Police Inspectorate, roughly 292 thousand people, Romanian
    and foreign citizens, have been registered at Romania’s border checkpoints of
    late. Among them over 12,600 Ukrainian nationals, which bring the total number of
    Ukranian refugees who have entered Romania since the beginning of the conflict up
    to almost 2 million. Most of them have only transited Romania to other
    destinations.








    TENNIS On Thursday
    night, the Romanian-Austrian pair Bernadette Szocs/Sofia Polcanova walked away
    with gold from the women’s double finals of the European Table Tennis
    Championships in Munich, Germany after a win against the all-Romanian pair,
    Elizabeta Samara/Andreea Dragoman. Samara and Dragoman became silver medalists,
    while Adina Diaconu from Romania and Maria Xiao of Spain walked away with
    bronze. We recall that Bernadette Szocs and Ovidiu Ionescu won silver in the
    mixed doubles of the aforementioned competition.








    FOOTBALL Two draws
    and a defeat are the results obtained by the Romanian football sides in the
    first round of the Europa Conference League’s play-offs. The Romanian champions
    CFR Cluj ended in a goaless draw their away match against Slovenian side NK
    Maribor held on Thursday night. Universitatea Craiova drew their home game
    one-all against Israeli side Hapoel Beer-Sheva, FCSB, runner-up in the Romanian
    championship, lost 2-1 their home match against the Norwegians from Viking
    Stavanger. The return matches are due next week.






    (bill)

  • Fiscal resetting in Romania

    Fiscal resetting in Romania

    The finance ministry made public the bill modifying the Fiscal Code of Romania, due to be endorsed by the government next week.



    The planned amendments include increases of the tobacco and alcohol excises, of taxes on gambling revenues, a lower ceiling for tax facilities in the constructions sector, agriculture and the food industry, and scraps previous tax facilities for the hospitality industry, with operators in the sector set to return to a regular tax on turnover. All these measures are scheduled to take effect on August 1.



    The document also includes provisions due to come into force as of January 2023, such as a raise on dividend taxes from 5% to 8% and a change in the criteria that define microenterprises by lowering the revenue ceiling from EUR 1 mln to EUR 500,000, with the microenterprise legally bound to have at least one employee.



    Also, as of January 1, VAT will be raised from 5% to 9%, both for food and beverage deliveries and for restaurant and catering services, as well as for accommodation services. The bill also stipulates changes in property owners taxes.



    On the other hand, governmental sources also mention a possible adjustment of pension benefits to the inflation rate, starting next year.



    The draft amendments to the Fiscal Code were one of the topics discussed by president Klaus Iohannis in a recent press conference. He pointed out that a modernisation of the fiscal legislation was due, and added that he had discussed this with the Liberal PM Nicolae Ciucă and the relevant ministers. The president also emphasised that no taxes and charges were considered for regular people, but that the changes are related to situations that had not been regulated properly before:



    Klaus Iohannis: “I have asked them to analyse things very carefully, to avoid putting additional burdens on regular people and not to discourage businesses, but instead to make changes that make things more transparent and fairer. Virtually, this would improve revenue collection to the state budget, and better collection means less tax evasion.”



    Romania does not plan an austerity procedure at this time, the president also added, and explained that measures of that kind taken during the 2009 economic crisis failed to yield good results. He also warned that the government cannot earmark substantial funds for offsetting the rise in fuel prices at the expense of investments, which are still necessary.



    Mr. Iohannis voiced satisfaction with the work of the government, and said the Cabinet members did their job well and solved a lot of problems. (AMP)

  • Disputes over fuel prices

    Disputes over fuel prices

    Fuel
    prices have risen substantially over the past few months across Europe, and the
    trend is likely to continue.


    Romania
    covers 70% of its oil demand from imports, and supplies are received
    exclusively via the Black Sea, with transport and insurance costs skyrocketing
    because of the war in Ukraine.


    The parties
    in the ruling coalition are looking for solutions to cut fuel prices, but they disagree
    on what the best option would be. Although they agree that price rises have
    reached a critical point, the Liberals and the Social Democrats have different
    views on how to reduce prices, and pass the responsibility between the Liberal
    energy minister and the Social-Democrat finance minister, with the Social
    Democrats favouring a price ceiling and the Liberals-a new fiscal intervention.


    USR
    party in opposition Tuesday tabled a simple motion against the energy minister Virgil
    Popescu, whom they accuse on incompetence. On top of this, carriers demand a
    solution as soon as possible.


    The Smart
    Energy Association, on the other hand, believes a solution would be to reduce
    excises and VAT. According to a report made public by the association, the
    government is the main beneficiary of the rise in fuel prices, having gained an
    additional EUR 600 million this year compared to the corresponding period of
    2021. The organization also argues that a ceiling on retail prices would be
    more harmful to the economy.


    Meanwhile,
    energy experts claim petrol and diesel prices will continue to go up as long as
    the demand remains high, and a governmental intervention might have undesired
    effects. Another reason for the price increase is the depreciation of the
    Romanian currency. Gabriel Avăcăriţei, editor-in-chief of Energynomics, shared
    his views on the topic to Radio Romania:


    Gabriel
    Avăcăriţei: The upward trend is most likely to keep as long as the demand
    remains high. As long as we continue to see lots of vehicles in the street,
    this means people can afford this high fuel price. And there is something else I
    would like to add. Over the past 10 years, Romanians’ average incomes have
    grown by 100%, to roughly EUR 1,000. So when average revenues go up more than
    fuel prices do, then people’s spending power is higher.


    Gabriel
    Avăcăriței also argues that, although various measures have been taken in
    several European countries, their impact on consumer prices has not been
    substantial.


    Nonetheless,
    tentative protests are beginning to be reported in the country with respect to the
    recent price rises. (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)

  • Government makes third budget adjustment in 2020

    Government makes third budget adjustment in 2020



    The government
    in Bucharest on Monday adopted the third budget adjustment this year.
    According to PM Ludovic Orban, the adjustment was necessary to cope with
    the expenses triggered by the COVID-19 pandemic. The rectification was also
    needed to secure the payment of pensions and for the balancing of local
    budgets. PM Orban also explained new challenges and expenses never ceased to
    occur, given that the pandemic but also a series of legislative initiatives increased
    the pressure on social expenses. Contrary to the estimates made in the
    summer, by the end of the year the budget deficit will account for 9.1% of
    the GDP, while the economy will shrink by 4.2%.

    It is the last adjustment the Government has adopted this year, which took the budget deficit to more
    than 96 billion lei (that is more than 19 billion Euros). The extra sums of
    money will be earmarked to the Labor Ministry, for the payment of pensions,
    for the benefits of furloughed staff and the flexible work
    schedule. The Healthcare Ministry will also receive an increased sum of
    money, in support of the Ministry’s fight against the COVID-19 virus. Of the approx. one billion lei, that is roughly 200 million Euros, extra sums
    of money will be earmarked for the payment of incentives for ambulance
    workers who were left out of the initial version of the Government’s
    executive order stipulating that risk condition incentives would be earmarked
    for doctors on the front line of the fight against the pandemic. Furthermore,
    Finance Minister Florin Cîţu made public the fact that Romania’s contribution
    was increased for the European financial effort to come up with a vaccine
    against SARS-CoV-2.

    Extra sums of money would also be earmarked
    for investments. Florin Cîţu specified the most recent budget adjustment provided for the continuation of investments, standing at around 55 billion
    lei (roughly 11 billion Euros), up from the initial budget. Also, Education
    and Agriculture have also received extra sums of money as a result of the
    latest redistribution of funds in 2020. The Ministry of Agriculture will be
    the recipient of extra sums of money, to be paid in compensations to the
    drought-hit farmers. In turn, the Finance and the Interior Ministry will
    receive less money as a result of the third budget adjustment. However,
    the Defense Ministry will be subject to the most substantial cuts, accounting
    for around 2 billion lei (some 400 million Euros). The
    Presidential Administration and the Chamber of Deputies will also receive
    less money than initially stipulated.

    In another move, the Fiscal Council has
    estimated the budget deficit in 2020 would account for 9.8% of the GDP,
    standing at 0.7% above the Finance Ministry’s forecast. According to the
    Fiscal Council’s stance on the Government’s third budget adjustment in
    2020, the public finance status at the end of the year was important because
    it was the departure point for the budget construction in 2021. The Fiscal
    Council, among other things, also recommended a restructuring of the
    expenditure as well as of the budget revenues through the enlargement of the
    taxation base, the improvement of the tax collection system and a better
    absorption of the European funds.

    (Translation by Eugen Nasta)



  • Draft state budget for 2019

    Draft state budget for 2019

    Criticised by the right-wing Opposition for the unacceptable delay in coming up with a public budget law, on Thursday the Government formed by the Social Democratic Party and the Alliance of Liberals and Democrats made public the 2019 state budget bill. According to the Ministry for Public Finances, the budget relies on a Gross Domestic Product that for the first time exceeds 1,000 billion lei (roughly 212 billion euro), on a 5.5% economic growth rate, a 2.8% average annual inflation rate and an estimated budget deficit of 2.55% of GDP.



    The revenues expected in 2019 are put at over 341 billion lei, accounting for 33.4% of the GDP. According to the authorities, the largest amounts are expected to come from social security contributions, VAT, excises, as well as from income taxes. In turn, public expenditure is put at over 367 billion lei, accounting for 35.9% of GDP. The biggest funds will be spent on social assistance, public sector salaries and investments.



    Unemployment is supposed to drop this year from 3.31% in 2018 to 3.2%, meaning that in late 2019 the number of unemployed people in Romania will be around 287,000. Net average salaries will go up to around 656 euros, and the average number of people employed will slightly exceed 6.6 million.



    The main goals of this years state budget are to support public investments, public healthcare and education. Investments will account for 4.57% of GDP and will be channelled, among other areas, into the National Programme for Local Development, the defence industry, transport infrastructure and water management. The budget earmarked for the public healthcare sector is approx. 12% higher than in 2018, and will be spent primarily on hospital equipment, particularly for the procurement of incubators, ultrasound machines, screening, MRI scanning and radiotherapy equipment.



    In Education, the 47% budget increase is mostly designed to cover salary raises, but money will also be earmarked for investments and projects aimed at modernising the teaching process by means of ITC equipment.



    The state budget also stipulates a 15% increase in pension benefits, starting this autumn. The defence sector receives, in its turn, 2% of the GDP, in line with the commitments undertaken as a NATO member.



    As always, the draft state budget has been met with a fair share of discontent. Although larger sums have been earmarked for the local administration, mayors argue that local budgets will be severely reduced because town halls are expected to take over from the central authorities a large share of social assistance expenses. Also, the ministries for the business environment, communications and energy will be getting smaller budgets than in 2018.



    (translated by: Ana-Maria Popescu)

  • April 24, 2018

    April 24, 2018

    MEETING — Bucharest is today hosting a high level meeting attended by representatives of Romania, Bulgaria, Greece and Serbia. Talks will focus on regional interconnection projects, the stage of Serbia’s EU accession and the European perspectives of the entire region. PM Viorica Dancila will welcome the Serbian President Aleksandar Vucic, the Greek PM Alexis Tsipras and the Bulgarian PM Boiko Borisov. This is the third such meeting in this format after the ones held last year in Varna, Bulgaria and Belgrade, Serbia.




    DECLARATION – The Romanian Senate and Chamber of Deputies speakers, Calin Popescu Tariceanu and Liviu Dragnea, respectively, signed in Tallinn, Estonia, the Declaration of cooperation among national parliaments of the three countries that will take over the EU Council Presidency next year. Paula Risikko, the head of the Finnish Parliament and Gordan Jandrokovic, the head of the Croation Parliament, represented the other two signatory states. The Declaration was signed on the sidelines of the Conference of the Speakers of the EU Parliaments held in Tallinn, Estonia, that comes to an end today.




    REVENUES – Romanians who work abroad sent home 4.9 billion dollars last year. According to a report made public by the World Bank, after three years of constant decline, the amounts sent to Europe and Central Asia went up by 20.9% last year, with the biggest transfers being reported in Russia, Ukraine and Romania. The World Bank document also shows that the increase in these amounts was due to an appreciation of the European and Russian currencies as to the US dollar, the important economic growth and better employment perspectives in the countries where the people who send their revenues to Europe and Central Asia work. The perspectives for 2018-2019 are positive, but the increase will be moderate.




    TALKS – French president Emmanuel Macron is on an official visit to the United States during which he tries to convince the White House leader Donald Trump not to walk out of the deal with Iran. Trump warned he would pull the US out of the nuclear agreement unless tougher conditions are imposed on Iran by the 12th of May. Washington says the agreement with Tehran should also impose restrictions on the Iranian ballistic missile programme. Talks are also expected to tackle Washingtons new tariffs on steel and aluminium imports. These mainly target China, but other exporters can also be affected, such as the European Union. Washington temporarily excluded the EU from these tariffs, but the exemption expires on the 1st of May.




    AGENDA – Romania firmly supports the continuation of the EU and NATO accession process in the southeast European region, a priority that will be high on the agenda of Romania’s EU Council Presidency in the first half of 2019. Romanian State Secretary for Strategic and Bilateral Affairs in the Euro-Atlantic Area, George Ciamba, made this statement at the meeting in Slovenia of the foreign affairs ministers participating in the South-East European Cooperation Process. The Romanian official also urged states in the region to carry on reforms. Talking about migration and terrorism, the Romanian official pleaded for solidarity and enhanced cooperation in the field and underlined the EU’s constructive approach in fighting these problems. (Translated by Elena Enache)




  • 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.