Radio România Internațional

Tag: Tanczos Barna

  • An outlook on the 2025 budget

    An outlook on the 2025 budget

    In a complicated economic context, where public debt has exceeded 54% of the GDP, and the budget deficit is approaching 9% of GDP, drawing up Romania’s 2025 state budget is no easy task. Especially since two of the main international rating agencies have downgraded the country’s rating from stable to negative. Based on a deficit of no more than 7% of the GDP, the draft budget is expected to be approved by the Government by the end of the week. The bill will then be submitted to Parliament for debate and approval. According to the document, authorities must first cut public spending. Thus, the budget of the Presidential Administration will reportedly be slashed by 10%, that of the Senate by 5%, and that of the Chamber of Deputies by 9%.

     

    The increase in pensions remains under debate, given that the Finance Ministry claims this will not be possible this year. Finance Minister, Tánczos Barna, says the 2025 draft budget, which many regard as moderate, ensures the payment of salaries and pensions and the development of settlements. “The budget stipulates the construction of highways for 20 million Romanians. The budget allots funds for the development of rural infrastructure for all Romanians. We have funds for all Romanians to pay salaries in Education, in the Ministry of the Interior, in all ministries that need to pay salaries, at the level of 2024. We have the proper funds to pay all pensions (…) at the value of November-December 2024, which will remain in place month by month throughout 2025”, the Romanian official pointed out. Minister Barna also mentioned that the budget of the Defense Ministry will be higher compared to 2024 and that the budgets of other ministries, such as the Environment, Health, Education and Transport, will also increase.

     

    To achieve more flexibility, personnel expenses will be reduced in each institution, most of them seeing their budgets slashed by 5%, with the exception of Education, hospitals or Internal Affairs. With respect to loans, Tánczos Barna said the authorities are considering all possibilities in order to cover the budget deficit. “Romania borrowed a lot last year, it will borrow less this year and even less next year. We have a roadmap for reducing loans year by year, over the course of seven years”, Tánczos Barna added. Fortunately, Romania’s downgraded rating did not also change its rating in terms of investor appeal, which would have increased Romania’s borrowing costs. According to experts, skepticism persists, however, among investors and rating agencies, as a result of political instability and delays in implementing structural reforms. (VP)

  • Efforts to reduce the budget deficit

    Efforts to reduce the budget deficit

    The Economic and Financial Affairs Council (ECOFIN) approved, in Brussels, the budget deficit reduction plans for eight EU states, including Romania. The Romanian Finance Minister, Tánczos Barna, states that reducing the deficit over a period of seven years instead of four will bring many advantages to the country. First, it will allow the Romanian economy to maintain a high level of public investments, and Romania fares well in this regard among the EU states. It is at the same time a premise for avoiding imbalances and for sustainable economic growth. Apart from Romania, four other member states – Spain, Italy and Finland – requested the extension of the adjustment period. The European Commissioner for Economy, the Latvian Valdis Dombrolskis, explained that the first analyses will be published in the spring.

     

    On the sidelines of the Council meeting, he had a separate meeting with the Romanian Finance Minister to discuss the details of the plan. Tánczos Barna states that, throughout the seven years, Romania will receive financial and technical support to restore the macroeconomic balance. The parameters indicated by the European Commission aim to keep public expenses under control and to obtain economic growth through investments. Romania’s fiscal budgetary plan aims to stabilize the public debt and reduce the deficit to below 3% of the GDP, in the period 2025-2031. Romania will continue to develop, protecting essential investments and ensuring long-term financial stability, says, in turn, the Romanian Minister of Investments and European Projects, Marcel Boloş, in a Facebook post. In his opinion, the European Commission’s decision to approve Romania’s budget deficit reduction plan will allow the government to avoid the pressure of an accelerated adjustment or the adoption of dramatic measures to reduce the budget deficit. Massive spending cuts, blocking investments in hospitals and roads, massive tax increases, all these would have been the consequences of a tough adjustment imposed by the European Commission, Marcel Boloş said.

     

    On the other hand, the minister also points out, through this plan international credibility is maintained, in the context in which non-compliance with fiscal commitments would have led to a decrease in the country’s rating, which would have made loans more expensive and harder to access. The decisions show that European economies currently need time to achieve sustainable fiscal consolidation without sacrificing development. Without this plan, Romania would have risked losing what is being built now for future generations, Marcel Boloş emphasized. 2024 was difficult for Romania, with local, European Parliament, presidential and parliamentary elections. At the same time, it was a year in which pensions were recalculated, salaries were increased in several areas and investments were supported with unprecedented amounts. Romania ended 2024 with a budget deficit of 8.6% of the GDP. (LS)

  • No new taxes in the 2025 Budget

    No new taxes in the 2025 Budget

    Delayed due to the formation of the government, the approval of the budget for 2025 is the number one priority. It’s not just any budget, but one carefully constructed, without the excessive expenses that were included in the previous one and that generated a worrying deficit, which rose to 9% of the GDP. Meeting on the topic of the budget, the Prime Minister Marcel Ciolacu and the finance minister, Tánczos Barna, concluded that Romania could no longer afford an increase in spending on goods and services. On the other hand, the deficit target of 7% this year, assumed in the discussions with the European Commission, cannot be reached without freezing the salary and pension fund and an additional pressure on the National Agency of Fiscal Administration (ANAF) for better VAT collection.

     

    However, in the case of small and medium pensions, the executive will look for solutions to supplement them, Marcel Ciolacu promises. Tánczos Barna pleaded for a rigorous control of expenses, so that Romania should respect its commitments to its European partners and insisted that, in terms of income, only the achievable ones should be included.

     

    Tánczos Barna: “The medium-term structural fiscal budgetary plan assumed by Romania provides for this year 7%, and for the next seven years it stipulates a progressive reduction of the budget deficit up to 3%. And this commitment should be respected not only now, what we build today, what we build for 2025 must also have an impact for the following years, so that on the investment side we should not reduce the amounts allocated for investments, we should constantly increase these amounts, and, on the other hand, we should not exaggerate on the side of unachievable incomes, to avoid a situation in which the difference has to be covered by loans”.

     

    Against the background of the scenarios circulated in the press according to which the authorities will increase some taxes, the PM and the finance minister have given assurances that the Value Added Tax remains unchanged.

     

    Marcel Ciolacu: “We are not increasing the VAT. Why don’t we increase the VAT? I represent the social democratic party. First, the effort would be transferred equally to all Romanians, regardless of income, effort meaning a decrease in the purchasing power. I am not doing this, and I am very glad that the minister says the same thing. At this moment, consumption will decrease and automatically, you will see, we will also have a decrease in inflation”.

     

    The ordinance adopted by the new coalition government (PSD – PNL – UDMR) at the end of the year provides for the reduction of state expenditures, the elimination of some fiscal facilities, in the case of IT, constructions, and the agri-food industry, as well as the reorganization and merger of agencies within the General Secretariat of the Government. A similar approach will also target the executive’s own functioning apparatus, as Romania needs a structural reform, Marcel Ciolacu also said. (LS)

  • January 8, 2025 UPDATE

    January 8, 2025 UPDATE

    TALKS Leaders of the ruling coalition in Bucharest convened on Wednesday for their first meeting this year. They decided that the first round of the presidential election be held on May 4 and the second on May 18. The coalition also reconfirmed the former PNL leader, Crin Antonescu as their common candidate for the presidential race. They also decided that the 2025 budget be presented before January 27 so that it might get Parliament approval in the first week of February. The Minister of Finance, Tánczos Barna, had earlier said the draft budget would observe the deficit cap of 7% of the GDP, without new tax increases, but through a more rigorous control of public spending. On the other hand, the unions called on the Ombudsman to appeal at the Constitutional Court the article in the recent emergency ordinance that provides for the freezing of pension indexation. The ordinance, which came into force on January 1, also provides for the freezing of salaries, the elimination of some tax benefits and the restriction of certain benefits.

     

    VISAS Romanians will be able to travel to the USA without a visa starting March this year. The only thing they need is a notification in a platform known as ESTA – Electronic System for Travel Authorization, the country’s Foreign Minister, Emil Hurezeanu said on Wednesday. Romania’s inclusion in the Visa Waiver programme will be formally marked on Friday, January 10, through an event staged in Washington DC. The US State Secretary of Homeland Security, Alejandro Mayorkas, and Romania’s ambassador in Washington, Andrei Muraru, are going to meet to record Romania’s accession to the US visa-free programme. The technical details and the date of the effective activation of the new travel regime are to be announced shortly. The Romanian citizens no longer need to give interviews at the US consulate while the travel permit, which replaces the present visas, will be valid for two years, with an unlimited number of entries into the United States. The aforementioned permit can be used for visits up to 90 days with the cost of 21 US dollars, says a notification posted on the Facebook page of Romania’s embassy in Washington.

     

    OMV The Austrians from OMV have concluded an agreement with the German utility group Uniper regarding the supply of natural gas under the Romanian “Neptun Deep” project in the Black Sea, as of 2027, Reuters reports. The deal comes after Russia stopped delivering gas through Ukraine on January 1, as well as a wider reduction in the European Union’s energy purchases from Russia due to the invasion of Ukraine. In the “Neptun Deep” area there are reserves of gas estimated at approximately 100 billion cubic meters, which makes it one of the most important extraction area in the EU. OMV and the Romanian state producer Romgaz own equal shares of the “Neptune Deep”. In total, Romania’s territorial waters of the Black Sea are said to host reserves of approximately 200 billion cubic meters of gas.

     

    ENERGY The liberalization of the energy market as of April 1, together with appropriate preparation while there is still time, is the only option for Romania – claims the president of the NGO Asociaţia Energia Inteligentă (Smart Energy Association), Dumitru Chiseliţă. In his opinion, the biggest challenge of the year is related to the fact that on March 31 the current capping and compensation scheme for natural gas and electricity prices will expire. Chiseliţă believes that an extension of this measure involves large expenses from the state budget, with the payment of compensations to suppliers. In addition, he mentions Romania’s commitments to the European Union for market liberalization, appreciating that a possible continuation of the ceiling will lead to a decrease in community funds, which Bucharest cannot afford.

    (bill)