New measures for budget money, officially announced

PM: There are over 50 measures, I fully take responsibility for them.

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Romanian Prime Minister Marcel Ciolacu and the Minister of Finance, Marcel Boloș, presented a first package of measures, which would allow the budget deficit to be included in the target. It is about restructuring in the budgetary sector, from the reduction of positions and mergers, to ceilings for telephony or per diems and holiday vouchers.

“It is the first real reform regarding the budget system. It is for the first time that a Romanian government assumes such an approach. I fully accept these reforms even if they disturb certain people”, said PM Ciolacu.

“There are over 50 measures. They were also discussed within the Coalition. We are talking about the first real reform regarding the budget system. It is for the first time that a Romanian government assumes such an approach. We are not talking about the recession in Romania, but about things assumed before the Commission. It is important to continue so that the funds are not blocked. We will more than likely manage to avoid this. Let’s have a fair negotiation with the Commission and have a very fair and committed plan. It is not comfortable neither for me nor for the minister. I’m not looking for culprits. I firmly believe that all the measures proposed by the minister are correct. It’s time for those who work to get their fair wages. Those who go to work to play Solitaire should look elsewhere for this way of working. It is incredible where this phenomenon has reached,” the Romanian PM argued.

He added that, through this whole package, a macroeconomic balance will be created. “These are measures that have immediate but also indirect effects.There are caps on increments, we can’t have increments higher than basic pay, you can’t have special pensions higher than earnings and retire at 40.I fully embrace these reforms even if they bother some people,” the PM concluded.

As for the fiscal measures that everyone is waiting for, the Minister of Finance extends the wait, stating that, for now, they have not been decided in the Coalition. However, he commented on the fiscal facilities, basically confirming that he will go for them.

“We have adopted tax facilities, very well. What happened in reality: areas of fiscal optimization have arrived. What it means: how to use the facilities to take me not to pay money to the state. I don’t expect applause. It’s not Boloș’s decision, it’s the Coalition’s decision,” said the Minister of Finance.

“The first step is taken by the state for what it means for the part of public spending reductions. It is a cost reduction plan with two major components: the first related to performance and the second financial discipline.The measures are on four levels: the authorities and the public sector, state companies and local subordinate companies – a total of 250,000 employees with costs of 14 billion lei – the third level is the autonomous public institutions, the fourth level is related to the consolidation the institutional capacity of the ministry,” Bolos explained.

“The reduction of the number of secretaries and undersecretaries of state by 20% was decided at the level of the Coalition. Reducing the number of vacancies: we have 204,000 vacancies on record. A service will not be able to work if there are not at least 10 subordinates. A general direction will not work if there are not at least 40. Thus the position of head of office is abolished.The accumulation of increments can no longer exceed the basic salary. The holiday voucher was the same as the holiday allowance: only the voucher remains for those with less than 10,000 gross lei. The voucher costs the state 1.8 billion lei,” the minister said.

Bolos further explained that in the category of benefits: the food allowance, not food regulations for national defense, costs the state 3 billion lei and is granted without limit and without ceiling. “It is not normal for a civil servant who earns 30,000 lei to also give him a food allowance.Ceiling on mobile phone expenses: 500 lei for phone, 50 lei subscription. For overtaking he pays out of pocket.The budget chapter related to local authorities – sports, recreation – event organization. Sometimes there are not enough weekends for local authorities to organize events.”

According to the minister of Finance, some public institutions, such as sports, culture, pubic health, school inspectorates will be decentralized by January 2025, meaning they will go from central authority to local one. “Until this date, the transfer to the county authorities will be carried out gradually,” Bolos detailed.

According to the new provisions, the number of advisers to general directors, directors will be reduced by 50% within state companies. “The maximum number of members in the CA, Supervisory Boards is a maximum of 7 people. Remuneration – has a fixed component reduced to a maximum of 3 salaries, the variable component – a maximum of 6 salaries but under certain conditions. There should be no accounting losses, debts. You don’t do work, you don’t take the variable component. Purchases under risk – If you made a purchase of a car for 100,000 euros, and the average is 30,000, you are under risk and the control is started,” Bolos said.

At the same time, the rulers say that the salaries of public institutions will be capped. “Leaders of public institutions, authorities and autonomous agencies – the leader’s salary can no longer exceed 6 times the gross allowance of a minister. It is absolutely unacceptable to hear in the public space how various authorities and agencies have hallucinatory salaries, I don’t want to give examples here, you know them too. Let’s agree to this limit (…) The salaries of subordinate personnel can no longer exceed 80% of the allowance / salary of the head of the institution.”

The minister of Finance said he would be able to answer the question if the budget deficit target for the September rectification remain at 4.4%  after the fiscal measures in the governing Coalition are concluded.

“The measures regarding holiday vouchers, food allowance, management positions from 12% to 8%, vacancies, personnel regulations will be applied from the entry into force of the ordinance. Here the Coalition will decide whether it will be September 1 or October 1, 2023. The assumed budget deficit target can be seriously discussed after, in addition to the measures we announced to reduce public spending – by the way, the impact for this year is 2 and a half billion calculated by applying these measures plus those coming next year future – together with the fiscal measures that have not yet been finalized will lead to an outline of the maximum budget deficit target that we assume, together with 3 more categories of measures.”

Bolos added they are also discussing some measures to combat tax evasion and also one on royalties. “We have a draft GEO for royalties. Some will grow considerably. You can’t get rich on state resources.”

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